What is an External Audit?

An external audit is an examination that is conducted by an independent accountant. This type of audit is most commonly intended to result in a certification of the financial statements of an entity. This certification is required by certain investors and lenders, and for all publicly-held businesses. The certification, known as an auditor’s opinion, is attached to the client’s financial statements when they are issued to third parties.

Objectives of an External Audit

An external audit has several objectives. They are to determine the following:

The accuracy and completeness of the client's accounting records;
Whether the client's accounting records have been prepared in accordance with the applicable accounting framework; and
Whether the client's financial statements present fairly its results and financial position.

There are other types of external audits that may be targeted at specific issues concerning a client's accounting records, such as an examination that searches for the existence of fraud.