Table of contentsExternal auditReasons for external auditImportance of external auditDifference between internal audit and external auditExternal auditJames Wilkinson (2013) defines external audit as “a company audit carried out by a party that is not a department or employee of a company to be audited”. External audit is also explained as an obedient or non-obedient audit carried out by a third party. It provides both business and government with useful oversight of company accounting. The purpose of the external audit is for the company to accept a third party because it will be more efficient in its work. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get Original Essay Reasons for External Audit First of all, the company will receive accurate and effective information by hiring an external auditor. This can happen for many reasons, such as the company's employees are already busy with other tasks, fraud within the company can prevent internal auditing, and the external auditors are well trained for these purposes. In all cases, the company will use external auditors to find the answer to certain questions regarding the accounting query. The external audit plan carried out by specialized companies may concern the lack of funds or the provision of another opinion. Second, an external audit report may arise when a government agency questions part of the company's financial statements. In this case, an external auditor will not be obedient. The IRS (Internal Revenue Service) will mandate this. These are the reasons why an external audit will take place in these situations such as the IRS questions the company's financial statements, the IRS will detect internal fraud, the company's statements may not be in compliance with the GAAP, the court authorizes the audit because it suspects the funds are being spent illegally. External audit fees are generally paid by the audited company. The omission of this is that if auditors discover illegal activity, the company may be charged for the costs of the external audit. Importance of external audita) Provides credibilityFinancial statements will be reliable if an external auditor evaluates them and agrees that the statements are detailed. Credibility is important, especially in the early years of a business, which is when the business is trying to build a positive reputation. b) Criticize internal processes Internal auditors will not criticize a company's internal processes because they are part of it. External auditors can detect movements from outside and determine where the company is wasting time and money. External auditors often criticize accounting practices. They can justify behaviors to the company to promote greater efficiency and tighten accounting practices. c) Double Check Internal Audit Internal auditors may be too close to the company due to their location within the company. Some internal auditors have enough experience to accurately audit the company's financial statements. External auditors can review the same items as internal auditors and double-check their work. They can also train internal auditors in accounting principles by explaining to them how their control differs from that of the internal auditor. Difference between internal audit and external audit Objective Designed to add value and improve the organization. An exercise to enable auditors to express an opinion on financial statements.ReportingReporting to.