What is an external financial audit?

An external financial audit refers to an examination of an organization's financial statements and related operations by independent auditors who are not part of the organization being audited. This process is primarily conducted to ensure that the financial records are accurate, complete, and comply with applicable laws and regulatory standards.

External auditors assess the integrity of financial reporting, providing assurance that reports are free from material misstatements, whether due to fraud or error. This level of scrutiny helps instill confidence among stakeholders, such as investors, regulatory bodies, and the public, fostering trust in the organization's financial practices.

Other options describe different types of audits or reviews that do not encompass the core definition of an external financial audit. For example, an internal review pertains to assessments conducted within the organization to evaluate its financial processes, while a review by government auditors typically focuses on compliance with regulatory standards or funding usage rather than the overall financial health of the organization. A financial review of personal expenses is unrelated to the structure, reporting, or compliance expected from an external financial audit.