What Is External Verification?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 02 December 2019
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External verification is a process that involves the use of a third party to confirm or verify the business activities and financial transactions related to a particular company. This type of verification is often used as part of an audit process, as well as when the company is seeking membership in some type of industry-related association or consortium. The purpose behind the external verification is to ascertain if the company’s operating processes, including the accounting strategies used to track financial transactions, are being conducted within acceptable standards,

With an external verification, the services of a third party qualifier are secured in order to scrutinize the efficacy of company documents. Typically, the choice of qualifier is left to the organization that is seeking the confirmation of the company’s business activities, such as the governing body of the association that the company owners are seeking to join. The scope of the verification process will vary, depending on the reason for the audit. In some cases, the focus will be on evaluating the financial and accounting aspects of the operation, while at other times the audit will make use of documentation to confirm whether or not company policies and practices are in line with standard business practices and current governmental regulations.


The qualified auditor who is engaged to conduct the external verification is granted access to all relevant documents and data, making it possible to verify the content of the documents with relative ease. This means that accounting records are evaluated not only in terms of following generally accepted accounting principles, but also in whether the entries are in harmony with the supporting documents, such as invoices, bank account statements, and other records that serve as the source for those entries.

While an external verification is often conducted in order to verify or confirm the veracity of company documents as part of a business deal or some other activity the business wishes to pursue, this type of audit may also be conducted at the request of the company itself. Typically, the purpose in this instance is to ensure that the business is in compliance with its own internal regulations as well as any external standards that may apply. With this application of the external verification, the goal is usually to identify any areas in which there is room for improvement, allowing the business the chance to make the necessary changes before pursuing opportunities involving other parties.


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