An external audit is an independent examination of the financial statements prepared by the organization. It is usually conducted for statutory purposes (because the law requires it).
An audit results in an audit opinion about whether the financial statements give a ‘true and fair’ view of the:
- State of affairs of the organization
- Operations for the period
An external audit can be conducted either as part of the annual review of accounts or as a special review by a donor agency. It is conducted by a registered firm of accountants with recognized professional qualifications, such as CPA, ACA or ACCA.
The purpose of external audit is to verify that the annual accounts provide a true and fair picture of the organization’s finances; and that the use of funds is in accordance with the aims and objects as outlined in the constitution.