Distinction between Internal and External Audit Report in Pantech Group Holdings Berhad

FUNDAMENTAL INTRODUCTION AND BASICS OF AUDITING 1
Distinction between internal and external audit report in Pantech Group Holdings Berhad
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FUNDAMENTAL INTRODUCTION AND BASICS OF AUDITING 2
1.0 Introduction;
Audit reporting is the legal presentation of disclaimer findings issued to the users after an
independent audit examination of the financial books and control systems is done. This reporting
is what is presented in the audit report that is classified as either internal or external depending
with factors outline here below. It should also be known that for illustration purposes I have used
one of the listed companies in Malaysian i.e. Pantech Group Holdings Berhad 2017 reports to
explain the differences between internal and external reports.
2.0 Description of internal audit report
Internal audit is the cross-examination of firms’ practices and operations that see
into it that company’s risks (Lin, Prizing, Vargas, & Bradman, 2011 p 300) i.e. inherent,
detective and controlled are mitigated and controlled thus enabling achievement of strategic
objectives and financial goals. Internal audit report similarly entails business practices
examination of procedures and controls of the firm's internal control systems (So, & Martinov-
Bennie, 2011 p 620) .The internal Audit process is guided by Malaysian Internal Audit
Standards.
The core difference that dictates whether an audit report is internal or external is the users
and conductors of the audit and reports respectively (Erkens, & Bonner, 2012 p 132).On the face
of it internal means operations within the organization, therefore, it is presumed that internal
report is used internally by internal users who are the directors and management at large
(Carcello, Eulerich, Masli, & Wood, 2018 p 27). Internal audit reports are likewise prepared by
persons from the company who act on behalf of the company as agreed hence do so for the
interest of the firm.
Internal Audit report is discretional or rather optional because a firm may opt to do or not
to do an internal audit thus not a mandatory aspect unlike external audit that is a compulsory
legal requirement to all firms in Malaysia and especially by the users of the information i.e.
investors, shareholders and general public as depicted in the Pantech Group Ltd whereby the
shareholders and the public are informed of what was reported in the financial statements onin
pages 34, 35 & 36.
This has ideally made internal audit report appear as though it is an in-house business
affair since its sole purpose is what suits the company progress hence creating some sense of
flexibility and amendments an aspect that show that has no tight operational legal framework like

FUNDAMENTAL INTRODUCTION AND BASICS OF AUDITING 3
what happens to the external audit that no one discretion and quiz of mind or chance is applied
instead the prevailing audit legal framework and standards is what is applied (Obaidat, 2007 p
187).
The internal audit report is prepared by internal auditors who are employees of a
not employed and hired by the company hence are entitled to a salary remuneration and therefore
obliged employees of the company who are expected to safeguard the interest of the company at
all cost whether it is reasonable or not as referenced by regardless is healthy or not. They are
compensated in salary form basis hence are part of the company payroll ( Singh,& Newby,2010
p 320). More illustration is seen on) as the reference in page 45 of the Pantech Ltd Group reports.
This is further illustrated in page 17 of the Pantech Ltd Group Company 2017 report that informs
us that the Audit Committee who conducted and prepared the 2017 Pantech internal audit report
was appointed by the board of directors who were exclusively independent non-executive
directors (Erkens, & Bonner, 2012 p P.130).
3.0 Description of external audit report
External audit, on the other hand, involves examination of annual financial accounts or
books of accounts and statements so as to find out whether they present true and fair position
pursuant to set Audit regulations and framework in place. The findings were done in writing
(hard copy) or in soft copy explaining whether the financial statements present true and fair view
of the firm, is ideally what is referred to as external audit-report.
External audit report whose users are external parties who do not directly relate to the
firm operations as referenced in (Marcu,2018 p 193).These external users are mostly the
shareholders, customers, investors, creditors, financial institutions and of course Malaysian
Government. Similarly, it is prudent to understand that external audit report preparers and
examiners are externally consulted and do work in the best interest of the external parties who
indeed are the user's external users themselves.
External Audit report is always available to the public with all its contents publically
available since they are entirely prepared as per regulations and standards so as to that safeguard
the interest of all the users of the information, hence are always reported and published in
websites and newspapers hence can be accessed in whatsoever means and form a user would
wish to access it (Petraşcu, & Tieanu, 2014 p 2014.P.490). For instance, this external audit report