What is the role of external auditors in financial reporting?

External auditors play a crucial role in the financial reporting process by providing an independent assessment of an organization's financial statements. Their primary objective is to enhance the credibility and reliability of those statements for various stakeholders, including investors, creditors, and regulators.

The assurance that external auditors provide means they conduct an impartial evaluation of the company’s financial reporting in accordance with generally accepted auditing standards, which involves assessing the risk of material misstatement due to irregularities or errors. They perform various procedures such as examining financial records, evaluating internal controls, and confirming transactions to ensure that the financial statements reflect a true and fair view of the company's financial position and results of operations.

This independent verification helps to increase the users' confidence in the financial statements, making it less likely that users will encounter material misstatements that could affect their economic decisions.

The other options highlight activities that are not part of an external auditor's responsibilities, such as preparing financial statements, which is the responsibility of management, or helping a company evade taxes, which contradicts the ethical obligations of auditors. Additionally, while auditors may consider operational compliance during their review, ensuring compliance with all operational policies is not a central duty; it is more focused on financial information and reporting standards.