External auditing is a common practice in companies and institutions, where professional auditors from abroad evaluate that a company functions correctly in relation to the processes it assumes and its regulatory framework.
Through the execution of an external audit , an external audit company analyzes the processes of another company that requires its audit services.
With this type of analysis or evaluation process, an external and professional point of view about the activities of a particular company is sought.
Professional auditor attends a project or corporation employed to carry out a thorough work of observation and control of resources used.
After your observation, you should translate your conclusions through an audit report that summarizes the points of improvement and possible legal or operational violations that are being incurred. Often, these types of audits are frequent as a previous step to a business sale.
Therefore, this type of evaluation mechanism is understood as an additional tool for measuring or calculating the value of a company. Additionally, and at the same time, their economic health and the role they play in their particular sector are known in depth.
Characteristics of the external audit
The external audit is largely distinguished from the internal modality based on the origin of the professional auditor. This responds to the fact that it is individuals or external auditing departments and belonging to another society that carry out the analytical work:
- Your opinion must be exercised independently and outside the organizational chartof the company evaluated.
- In addition to reflecting in your report the elements of process improvement towards greater efficiencyand optimization of resources, you should report possible cases of negligence and breach of the regulations that affect the company analyzed.
- The audit document issued will be valid for third parties, such as competing companies or official bodies.
- This type of process does not always arise from the decision of the company that wants to undergo an audit. In many occasions this process is produced according to an official request of the State.
- The results obtained have legal validity and are provided to third parties.
Professionals responsible for conducting an external audit
As indicated at the beginning, the professionals in charge of performing external audits come from third companies. These are created to offer these types of tasks and business consulting and advice.
The credibility of this type of analysis is presumably greater than in internal audits. This is so, because it is commonly understood that an external company has a prominent point of independence compared to the position estimated for an internal auditor.
Having no business ties continued over time, decision making has less dependence and commitment to the economic performance of the audited.
At the same time there are no emotional points of view, as in cases such as family businesses.