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| A very wise step for any business is to choose an external auditing team. |
of objectively obtaining and evaluating the accounts or financial records of a governmental, business, or other entity. Whereas some businesses rely on audits conducted by employees—these are called internal audits—others utilize external or independent auditors to handle this task (some businesses rely on both types of audits in some combination). External auditors are authorized by law to examine and publicly issue an opinion on the reliability of corporate financial reports.
The business of external auditing
is to determine the extent to which the organization adheres to managerial policies, procedures, and requirements. The independent or external auditor is not an employee of the organization. He or she performs an examination and issues a report containing an opinion on a client's financial statements. During the course of an audit study, the external auditor also becomes well-acquainted with the virtues and flaws of the client's accounting procedures. As a result, the auditor's final report to management often includes recommendations on methodologies of improving internal controls that are in place.
The compliance audit,
the financial statements audit, and the operational audit are among the major types of audits conducted by external auditors. A compliance audit has as its objective the determination of whether an organization is following established procedures or rules. A financial statement audit (or attest audit) examines financial statements, records, and related operations to ascertain adherence to generally accepted accounting principles. An operational audit examines an organization's activities in order to assess performances and develop recommendations for improvements, or further action.
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READ MORE>> inc.com: "Audits, External" from Encyclopedia of Business Terms
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