Medical Auditing Practice Exam

External audits are indeed conducted by independent third parties, which is a key characteristic that distinguishes them from internal audits. These external auditors are not affiliated with the organization being audited, allowing them to provide an objective review of the organization's financial statements, compliance with laws and regulations, and overall performance. This independence is crucial for stakeholders who rely on the audits for truthful and unbiased financial information.

In contrast, internal audits are typically performed by employees of the organization or by external contractors who are not completely independent but have a financial relationship with the company. Their focus often extends beyond just financial compliance; they evaluate the effectiveness of internal controls, risk management processes, and operational efficiency, contributing to overall organizational governance. This comprehensive approach allows internal auditors to identify areas for improvement and assist in achieving organizational objectives.

The other answer choices highlight some misconceptions regarding internal and external audits. For example, internal audits are not limited to financial aspects, and external audits are generally regarded as more objective due to their external nature and independence, rather than being less comprehensive than internal audits. Understanding these distinctions is crucial for recognizing the roles each type of audit plays in an organization.