What defines an external auditor?

An external auditor is defined as an independent professional who is not employed by the organization being audited and has no recent involvement with its operations or specific systems, such as a Health and Safety Management System (HSMS). This independence is crucial as it ensures an objective assessment of the financial statements and operational processes of the organization. External auditors are typically hired to assess an organization's financial health and compliance with regulations, providing stakeholders with assurance that the financial reports are free of material misstatements.

The independence maintained by external auditors allows them to offer unbiased opinions, which can help to enhance the credibility of the audited entity's financial statements. Their role is vital in building trust among investors, regulators, and the public, as they provide an external viewpoint on the company's financial performance and adherence to applicable standards.

In contrast, auditors who have previous work experience with the employer, internal auditors from a different department, or those specializing in internal compliance do not meet the criteria for being classified as external auditors, fundamentally because they may lack the necessary objectivity that comes from being independent of the entity being audited.