Audit and assurance roles

In this lesson

1. 0:00 Introduction to Audit and Assurance roles
2. 1:14 What is external audit
3. 2:47 Test of controls and substantive testing
4. 5:13 Four types of audit opinion explained
5. 9:27 Understanding internal audit function
6. 11:46 Key differences between external and internal audit
7. 16:16 Legal requirements for audit functions
8. 17:57 Practice question on audit reporting lines

About this lesson

James Wright breaks down what external audits actually are—independent examinations of a company's financial statements carried out by firms like KPMG or PwC—and explains the key procedures auditors use, including tests of controls and substantive testing. You'll learn the four types of audit opinion (qualified, adverse, and disclaimer) and understand what makes an opinion "pervasive" versus isolated, which is crucial for answering multiple-choice questions correctly. The lesson then shifts to internal audit functions and how they differ fundamentally from external audits. While external auditors provide assurance to shareholders about financial statements, internal auditors work within the organisation to evaluate controls, manage risk, and improve operations for company management. You'll discover the practical differences: who they report to, their legal requirements, and why larger companies almost always need both functions working together. By the end, you'll understand the hierarchy of reporting—why internal auditors should report to the audit committee rather than the finance director—and be able to confidently answer exam questions about audit structures and responsibilities. This lesson builds your foundation in how audit and assurance functions protect stakeholder interests and support good governance.

Duration: 21m