What distinguishes an external audit from an internal audit?

The distinguishing factor of an external audit is the auditor's independence from the organization being audited. This independence is crucial because it ensures that the audit is free from bias and that the findings are objective and credible. External auditors are typically third-party professionals who are not involved in the day-to-day operations of the organization, which helps provide stakeholders with a reliable assessment of financial statements or compliance with specific regulations.

While the other aspects mentioned play roles in the auditing process, they are not as definitive in differentiating between internal and external audits. Formal documentation requirements can apply to both types of audits, though they may vary in strictness and format based on the audit's nature. Financial data focus may be more prominent in external audits, but internal audits also consider financial performance alongside operational efficiency and compliance. Regarding subjective evaluations, while internal audits may incorporate some degree of judgment, external audits generally rely more heavily on established compliance standards and regulations to guide their evaluations.