In financial reporting, what is the role of external auditors?

The role of external auditors is primarily focused on ensuring compliance with legal regulations and verifying the accuracy of financial statements. External auditors are independent professionals who assess an organization's financial records and processes to provide an impartial evaluation of whether the financial statements present a true and fair view of the company's financial position. This includes examining various documents, processes, and internal controls to detect any potential errors, fraud, or misstatements.

Their work helps to enhance the credibility of the financial statements, which is crucial for stakeholders such as investors, creditors, and regulators who rely on accurate and honest reporting to make informed decisions. Additionally, by confirming that a company adheres to relevant accounting standards and legal requirements, external auditors play a vital role in maintaining the integrity of the financial reporting system.

The other options focus on functions that fall outside the scope of external auditors, such as direct management of financial accounts, preparation of internal budgets, and forecasting future financial performance, which are typically responsibilities of internal finance teams or management rather than external auditors.