Internal auditing is a professional service provided to a company to assist the company in meeting its corporate goals and objectives in part by evaluating and recommending risk management, control, and governance processes.
The Institute of Internal Auditors (IIA) defines internal auditing as follows.
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
Government entities, such as federal agencies, state governments, local municipalities (e.g., cities, counties) are subject to audits. In addition, recipients of government assistance or awards are must undergo audits to ensure proper use of funds.
Governmental auditing is the application of Government Auditing Standards (GAGAS) to high-quality audits and related engagements, with a focus on competence, integrity, objectivity, independence, and public accountability. GAGAS are issued by the U.S. Government Accountability Office (GAO).
A regulatory audit, often referred to as a regulatory compliance audit, is an independent, systematic evaluation or assessment of an organization's operations, policies, practices, and records to determine whether they comply with applicable external laws, regulations, standards, and internal guidelines.
The U.S. Internal Revenue Service (IRS) is one example of an organization that performs regulatory audits.