The concepts of external and internal auditor independence and objectivity

The purpose of this theoretical paper is to compare the concepts of external auditor and internal auditor independence and objectivity. The independence and objectivity of external auditors and internal auditors are viewed in the literature as attributes of strong corporate governance. Among others, Porter (1999) has recognised 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 for external and internal auditors, which has not been addressed in the previous literature. The purpose of this paper is to increase the understanding of these differences based on the IFAC and the IIA standards.