An external audit is a process that provides an independent opinion on a company's financial statements, operations, and compliance with applicable laws and regulations. This opinion is expressed by a certified public accountant (CPA) who is not an employee of the company being audited.

An external audit is an important tool for ensuring the accuracy and reliability of financial information. It provides reasonable assurance to stakeholders, including investors, lenders, and regulators, that a company's financial statements are free from material misstatements and errors. The audit process includes reviewing the company's accounting records, policies, and procedures, interviews with key personnel, and testing of the company's internal controls.

External audits are required by law for private and publicly traded companies, as well as for companies that receive government funding or operate in regulated industries. However, even companies that are not legally required to undergo an external audit often choose to do so in order to demonstrate their commitment to transparency and accountability.

One of the key benefits of external audits is that they can identify areas where a company can improve its financial reporting and internal controls. The auditor may recommend changes or improvements that can help the company operate more efficiently and effectively.
Another benefit of external audits is that they can help build trust between a company and its stakeholders. An external audit can reasonably assure investors and other stakeholders that the company is being managed responsibly by providing an independent and objective assessment of a company's financial statements.

Overall, an external audit is essential for ensuring the accuracy and reliability of financial information, building trust with stakeholders, and identifying areas for improvement. Companies that undergo external audits demonstrate their commitment to transparency and accountability, which can ultimately lead to increased confidence in the company and its operations.