Audits are used for evaluating organizations, persons, products or systems. Internal and external both type of audits are considered as important factors in the financial working of any organization or system. In this paper we would discuss the difference between internal and external audits and why these two audits are necessary in an organization.
The integrity of financial management is dependent on internal and external audit and both of them are considered to be the main aspects of financial management. Besides other sectors both these audits are quite necessary in health care management. The responsibilities on internal audit include elements like developing and implementing a flexible annual audit plan, providing a list of significant and measureable goals and the final result to the audit committee. The additional responsibilities of internal auditors are operations, services, controls and fraudulent activities. Similarly, other functions of internal auditors are developing objectives, plans and programs for the organization and dealing with regulatory issues and managing the financial, managerial and operational issues. The internal control of an organization is managed by the internal organization. Internal audit basically is perceived as a necessary evil and some organization treat this as unnecessary evil. The internal audit is not only about control and prevention it reduced costs and the enhanced nature of revenues can also be considered as the realistic objectives of internal audit. In the health care organization both of these functions are widely used and since health care organizations have a certain level of responsibility to the public that is the reason why audit is necessary in organizations related to health care. The financial managers of health care auditors have a legal duty that the organizations business must operate effectively and in accordance to the rules and regulation of the law.
Similarly, financial results must be reported accurately and in the entire organization especially the finance department must be free from frauds and financial mishaps. Due to ineffective policies and lack of disclosing the correct information the US government has imposed increased internal controls and laws like Sarbanes Oxley act and etc. In the scenario of health care provider the internal auditors of the organization examines the effectiveness and the efficiency of materials management systems. If the functions of internal audit are implemented properly then it actually ensures enhanced compliance. Internal auditors in a health care organization can manage the financial aspects related to pharmacy and it possesses the authority to recover lost payments. Therefore an organization can experience many benefits from internal auditors which include minimizing the regulatory and compliance risk in day to day business operations (Griffith).
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