External auditing or external auditor refers to the CPA firm or people who are working in the CPA firm that perform audit services to their client.

These firms normally operating independently from the clients that they are providing services for.

External audit firms normally engaged by entities to audit their financial statements annually based on the requirement of local law, management, and board of directors, shareholders, as well as others’ requirements.

In order to provide their services, the firm needs to get approval from the local authority that manage all the CPA firms, partners need to hold CPA certificate or equivalence, complying with local law, regulation, and international standards on auditing.

Services and Products:

External auditors provide many assurances and non-assurance services. Those services including an audit of financial statements, IFRS reporting, review financial statements, compiling financial statements, internal audit service, advisory services, Risks assurance, as well as corporate secretary.

There are many other services that could offer by external auditors based on the firm’s competency. Normally, big audit firms like big 4 have many more available services than small or local firms.

Independence and Objectivity:

External auditors normally work independently and objectively. This is to ensure the good quality of work they perform and integrity that has for the company being audited and shareholders of the company.

The external auditor needs to be independence and objective not only in person but also in the firm.

This can help to make sure that the trust from the public to audit firms is at the acceptable level and the value that the firm provides is for the company, shareholders, and public.

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Standard of Use:

An external auditor performs its services based on International Standards on Auditing, audit local standards, relevance local law & regulation.

External auditor also performs its services based on their internal policies and procedures that design to ensure that the high quality of services is maintained.

These policies and procedures are normally tailored from and address the international standard on auditing, local standard, relevance local law & regulation.

Appointment and termination:

Normally, the appointment of an internal audit is done by management and needs to be approved by the audit committee or board of directors. The appointment is generally for three to five years in office.

The termination of the auditor is normally done by the board of directors as the result of the request from management.


Auditors do not review all the accounts or items in the financial statements. They normally perform the risk assessment that related to the financial statements and then perform their testing based on the sample selection. There are many audit approach used by auditors to perform their audit.


External auditors report the result of their auditing to the audit committee or board of directors. Those reports including the audit report, and management letter.

External auditors also report the problems related to their auditing or communication with the management of the company to the audit committee.


External auditors normally express their opinion as to the result of their audit in the audit report that they issued to the audit committee as well as the board of directors. Those reports include their opinion.

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There are many types of audit opinions. For example, modified opinion, qualified audit opinion, disclaimer opinion, as well as adverse audit opinion.