What is the primary difference between internal and external audits?

The primary difference highlighted in the first option is indeed accurate, as it emphasizes the nature and scheduling of audits conducted by internal and external auditors. Internal auditors are typically embedded within an organization and execute audits continuously throughout the year as part of a systematic audit program. This ongoing assessment allows them to evaluate processes, controls, and risk management practices comprehensively and in real time.

Conversely, external auditors are independent entities that generally conduct their audits at predetermined intervals, often annual or bi-annual schedules. These audits are aimed at providing an objective assessment of the financial statements and related legal compliance to external stakeholders, including investors and regulatory agencies.

This distinction is crucial because it underlines the continuous nature of internal audits versus the periodic nature of external audits, reflecting the differing objectives and scopes of each type of auditor. Internal audits can provide valuable insights and recommendations for process improvements throughout the year, while external audits focus on delivering a level of assurance about the accuracy of financial reporting.

The remaining options do not accurately represent critical differences between internal and external audits in this context. For instance, regulatory approval is typically not a requirement for internal audits, and the evaluation scope differs significantly between the two; internal auditors look beyond just financial transactions, assessing operational efficiency and compliance as well.