INTERNAL AND EXTERNAL AUDITORS INDEPENDENCE AND OBJECTIVITY IN FUNCTION AGAINST FINANCIAL CRIME AND CORUPTION

The independence and objectivity of internal and external auditors are viewed in the theory and practice of auditing as attributes of strong corporate governance and public sector financial management. A few years ago accounting scandals on both sides of the Atlantic not only demonstrated the importance of this gatekeeper function, but also made clear that the concept of self-regulation of the audit profession is no longer sustainable. The present global financial crisis, and many audit experts has recognized the need to develop audit function in order to improve the corporate governance mechanism. As a means to enhance corporate governance, independence and objectivity are required of both auditors, even though they traditionally provide assurance services from different starting points. However, the roles of external and internal auditors have become more aligned due, for example, to internal audit outsourcing to external audit firms. This creates a need to discuss the differences in the concepts of independence and objectivity of external and internal auditors, which has been recognized but not specifically discussed. The purpose of this paper is to increase the understanding of these differences based on the IFAC and the IIA standards of auditing.