External auditors are typically:

• A. Independent, assess and evaluate the fairness of the financial statements
• B. Employees of the company
• C. Regulators
• D. Board members

Answer: (A)

The key idea here is independence and objective verification. External auditors provide independent assurance about the accuracy and fairness of a company’s financial statements. They examine the records, evidence, and internal controls to form an opinion on whether the financial statements present a true and fair view in accordance with the applicable accounting standards. Their independence from the company is crucial so users of the financial statements—like investors and lenders—can trust the audit opinion.

They are not employees of the company, so they remain separate from day-to-day management. They are not regulators or board members, so they don’t set rules or govern the company; instead, they assess and report on how well the financial statements reflect the company’s true financial position. By being independent third parties, they provide the confidence that the financial statements are credible for decision-making.