Independent auditing can best be described as:

• A. The preparation of tax returns and tax planning for individuals and businesses.
• B. The process of recording and classifying all business transactions within an organization.
• C. The internal review of an organization's operations by its own employees.
• D. An objective examination and evaluation of an organization's financial statements by a third party.

Answer: (D)

Verified step by step guidance

1. Understand the concept of independent auditing: Independent auditing refers to the objective examination and evaluation of an organization's financial statements by a third party, typically an external auditor.
2. Differentiate independent auditing from other accounting activities: Independent auditing is distinct from tax preparation, internal reviews, and bookkeeping. It focuses on verifying the accuracy and fairness of financial statements.
3. Recognize the role of the third party: The third party conducting the audit is external to the organization, ensuring impartiality and objectivity in the evaluation process.
4. Identify the purpose of independent auditing: The primary goal is to provide assurance to stakeholders, such as investors and creditors, that the financial statements are free from material misstatements and comply with accounting standards.
5. Understand the importance of independence: Independence is crucial to maintain the credibility of the audit process, as it ensures that the auditor's judgment is not influenced by relationships with the organization being audited.