Let’s say you’re buying a new dining table. An internal audit checks if the table has four legs, accommodates your chairs, and complements your decor. An external audit tests whether the table collapses under a roast dinner.
Both are necessary—but for very different reasons. One checks what you’ve built. The other tests whether it holds up under pressure.
Here’s how to make the most of both.
Internal audits: Check what you have and how it fits
Internal audits are your chance to take a structured look across your business. Not to fix problems yet, but to see what’s there, what’s missing, and how the puzzle pieces are aligned.
Think wide. Not deep.
Internal audits are broad in scope. You’re not digging into the detail of every function. Instead, you take a representative sample from key areas: compliance, controls, processes, and reporting.
This helps you spot patterns early without overwhelming your team.
Gather Facts. Not fixes.
At this stage, you’re collecting data—not drawing conclusions. A good internal audit answers three questions:
Validation – Do documented processes and procedures exist? Are there gaps? What tools are being used?
Compliance – Are you meeting regulatory requirements? Are any obligations being overlooked or misunderstood?
Known issues – Are there known friction points or risks, even if root causes aren’t fully understood yet?
By focusing on these three, you create a baseline for your systems—without overextending your resources.
Keep it lean to keep it useful.
Internal audits cost time and attention. And the more you expand the scope, the more they risk dragging on. A tight scope with a clear objective means:
- Quicker findings
- Faster action
- Lower internal disruption
Set clear boundaries, stick to the purpose, and avoid the temptation to turn it into a full-blown investigation. Save that for your external audit.
External audits: Test what’s working—and what’s not
Once your internal audit maps what’s in place, an external audit examines whether those processes are delivering. External audits are narrower but deeper. They zero in on risk points and performance gaps with objective scrutiny.
Focused scope. Sharper insights.
Rather than review everything, external audits zoom in on a specific area—like accounts payable or vendor data accuracy—and evaluate what happens under real-world conditions.
This gives you a clear read on:
- Where errors are hiding
- What risks you’re exposed to
- How your systems respond under stress
Objective, experienced feedback.
An external audit looks at your setup with fresh eyes. This removes internal bias and brings years of comparative industry experience to the table.
It stress-tests your operations:
Validation – Are your systems accurate, scalable, and robust? What happens in edge cases?
Compliance – Is your day-to-day execution aligned with your policies and regulatory standards?
Pattern detection – Where are recurring breakdowns happening? What’s the cost of inaction?
Think back to the dining table. Your internal team made sure it fits the room. The auditor checks how many plates it takes before the whole thing tips.
Cost structure is performance-based.
One of the advantages of a specialized external audit—like in accounts payable recovery—is the low upfront commitment. You don’t need to worry about tools, time, or staffing. The work is scoped, delivered, and—often—only charged based on what’s recovered.
It’s a practical way to uncover value with minimal disruption.
When to use which—and how to combine them
Use internal audits to:
- Create visibility across your business
- Prepare for strategic improvements
- Ensure readiness for compliance and reporting
Use external audits to:
- Pinpoint what’s going wrong
- Quantify the risk or loss
- Get expert-led fixes and next steps
Combined, they give you a powerful framework: internal audits show where to look, and external audits tell you what to do next.
Need help? Start with AP.
At Transparent, we’ve spent decades running external audits for accounts payable. Whether you’re seeing red flags or just want to benchmark your setup, we’re happy to help.
And if you want to run an internal audit but don’t know where to start? Our team can guide you through best practices and smart scoping. Just reach out.
