External Audit
Financial Dictionary — Auditing
Definition
External audit is an audit performed by an independent auditor outside the organization.
Detailed Explanation
External auditors provide an opinion on whether financial statements are presented fairly, enhancing credibility for stakeholders such as investors and regulators.
Common Uses
- Used in audit planning to understand risks and design procedures.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
Practical Example
- Example: The auditor references **External Audit** when designing procedures and documenting conclusions in the audit file.
Why This Term Matters
- Why it matters: Supports high-quality, defensible audit conclusions and helps detect material misstatements and control weaknesses.