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 objectives of an external audit are to determine:
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.