Internal audit system is a critical evaluation of the functioning of various departments of enterprise. Internal audit implies an audit of books of account by the employees of the organization itself.

Internal audit is done by separate department known as internal audit department. Its staff may or may not have required professional qualifications. An internal auditor has to see that there is no wastage and the business is carried on efficiently.

For example, when purchasing furniture, whether tenders were invited or not. When waste material was sold, whether that was sold by auction or by inviting tenders, and to the highest bidders.

Difference between internal check and internal audit.

Following are the main differences between internal check system and internal audit system:

1. Way of checking – In internal check system work is automatically checked whereas in internal audit system work is checked specially.

2. Cost involvement – in internal check system checking is done when the work is being done. Mistake can be checked at an early stage in internal check system.

3. Thrust of system – Thrust of internal check system is to prevent the errors and whereas the thrust of internal audit system is to detect the errors and frauds.

4. Time of checking – In internal check system checking is done when the work is being done whereas in internal audit system work is checked after it is done. Mistakes can be checked at an early stage in internal check system.

Thus combining these two systems, the purpose of prevention and detection of errors and frauds can be achieved.

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