People commonly ask, “What is the difference between a financial audit and an internal audit and why they are important?”
The financial audit is a review of the general ledger (accounting), lending, and internal controls at the credit union. The internal audit is primarily concerned about the operations and internal controls at the credit union. They are both audit functions, but have succinct differences though there may be occasional overlap, albeit limited, during the course of an audit. Each audit function is important.
The financial audit is required by regulation, while an internal audit is not required, but is utilized by credit unions that want to confirm their operations and practices are handled appropriately.
Despite perception, neither the financial audit nor the internal audit is designed to detect fraud, although fraud may surface during any of the audit functions performed.
When selecting an audit group, perform due diligence to ensure a qualified vendor with specific credit union knowledge is selected.
If you have any questions about financial or internal audits, please e-mail me at firstname.lastname@example.org or contact Financial and Technology Resources at 800-442-5762, extension 6464.