The advantages of external audit procedures are significant enough to make the hassle for companies well worth it in the long term. They can help to spot and ward off corruption and mistakes before they become overgrown and past the point of problem solving and correction. The role of the external auditor is to provide unbiased eyes for an organization so it knows its strengths and growth areas and can move forward in a positive way.


The primary advantage of external audits is that they are more impartial than internal audits.

Importance of an External Audit

While internal audits are important, and many organizations conduct them regularly, they cannot be truly impartial because people on the inside of an organization are naturally biased.

External audits provide a more impartial look at how the company is operating so that inefficiencies, mistakes and fraud are not as likely to hide undetected. Without the occasional external audit, a company could slowly boil in unethical practices or mistakes and not realize it until it is too late.

Advantages of External Audits

External audits are not perfect, but they do offer many benefits above a regular internal audit. Consider some advantages of external audit procedures:

  • They are more impartial than internal audits.

  • External auditors have no job outside of conducting your audit.

  • Outside eyes see your organization differently than you do.

  • There is quicker identification of possible problem areas.

  • They provide validation or invalidation of concerns raised during your internal audit.

Limitations of External Audits

External audits are typically more impartial than internal audits, but they are not without their limitations. This is why it can be helpful to have a variety of audit types conducted by different professionals over time. Consider the limitations of external audit procedures:

  • They are not totally impartial because the auditors are still paid by you.

  • External audits can sometimes be cost prohibitive for small businesses.

  • Confidentiality can be a concern.

  • You have to educate the external auditor about your company.

  • External audits require a lot of time and jumping through hoops.

Six Types of Audits

Whether you use an internal or external auditor, he is likely to perform one of six types of audits for your business:

  • Financial: Many external auditors focus solely on reviewing your financial records.

  • Compliance: Compliance audits ensure internal policies and procedures are being followed.

  • Operational: Operational audits examine business procedures and how they impact finances.

  • Information systems: Information systems audits address all computer-related and network-related operations of your business.

  • Product: Auditors can examine your products for defects and other concerns.

  • Integrated: Integrated audits are comprehensive audits that merge the above categories into one larger audit.

Benefits of Employing an Independent Auditor

While your internal audits have benefits for your organization, there are special benefits of employing an independent auditor. They do not have existing relationships with any other employees, do not have a feel for how things have always been done and do not have an interest in protecting Joe in accounting or Suzy in management.

Independent auditors can be more straightforward and honest with you than employees who are afraid to offend you or shift the status quo.

The Role of an External Auditor

External auditor responsibilities are different than those for anyone else in your company. They are responsible for avoiding personal relationships so they can follow best practices for auditors. They review where your company is, where it wants to be and how it is getting there financially and procedurally.

Your external auditor will examine your company's records, take note of areas of concern and report back to you with the findings so you can respond accordingly.