Definition
The external audit is a process (or a legal requirement for a certain type of company) under which an independent body checks and validates a company's financial statements. An external audit is carried out by an independent firm with no connection to the company. These audits carry out similar checks that form part of an internal audit, with the intention of gauging the financial health of a company.
Example
Some of the top external auditors are:1. Deloitte2. PWC3. Ernst and Young4. KPMG5. BDO6. RSM7. Baker Tilly
Why it matters
Some of the top reasons why an external audit is crucial are:1. External audits are not partial since the auditors do not have any relationship or association with the organization. These audits can be carried out without any fear of consequences at the workplace.2. External audits provide validation to specific and unique events that may be discovered through internal audits. 3. External audits can suit any type of organization. 4. External auditors may identify and highlight things that went unnoticed earlier, such as irregularities in a company's financial records.5. External audits can help in identifying certain trends that, if left unidentified, may impact the financial performance or reporting.