■ The external auditor is the person appointed by the local government under the Local Government Act 1995 to undertake an audit of the accounts and financial report for each financial year. ■ The internal auditor is the person appointed by the local government to undertake an audit of the adequacy and effectiveness of the internal control structure and may include financial controls, legislative compliance, information systems, employment practices and risk management.
The primary role of the internal auditor is to report to
the Chief Executive Officer (CEO) on the adequacy and
effectiveness of internal control processes and
procedures. The scope of an internal audit would be
determined by the CEO, with input from the audit
committee, on the size of the local government’s
internal operations and the level of compliance to be
achieved. The role differs from that of the external
auditor who is appointed by council on the
recommendation of the Audit Committee, to report
independently to it, through the mayor/president and
the CEO, on the annual financial statements. The
external auditor’s primary role is to decide whether
the annual financial statements of a local
government are free of material misstatement.
The audit report is addressed to the shareholders of the company being audited, this means the shareholders are acknowledged as the main recipients of the financial report and the attached audit report. Shareholders rely on the information provide by the management of their company in the financial report. The board of directors represents the shareholders and oversees the activities of a company and its management, it is the role of the board to ensure that the company is being run to benefit the shareholders. It is the director’s responsibility to ensure that the financial report is prepared so as to provided a true and fair view. The directors indicate to the shareholders whether they believe that the financial report and...
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