What type of audit ensures that the financial statements reflect a true and fair view of the company's activities?

An external audit is conducted by independent auditors who are not part of the organization being audited. The primary purpose of an external audit is to provide an objective assessment of the company's financial statements, ensuring they comply with accounting standards and accurately represent the company's financial position and performance. This type of audit is critical for stakeholders such as investors, creditors, and regulators, who rely on the credibility of the financial statements to make informed decisions.

In contrast, internal audits focus on evaluating and improving the effectiveness of risk management, control, and governance processes within the organization, and while they may review financial statements, their scope is broader and may not issue an opinion on the financial statements.

Compliance audits concentrate on assessing whether the organization is adhering to laws, regulations, and policies, which is distinct from the broader task of verifying the accuracy and presentation of financial statements.

Operational audits aim to evaluate the efficiency and effectiveness of operations and could involve examining financial processes, but they do not specifically assess whether the financial statements provide a true and fair view of the company's finances.