What type of auditors is required for collective investment funds according to regulations?

The requirement for external auditors for collective investment funds is based on regulatory standards aimed at ensuring transparency, accountability, and reliability in financial reporting. External auditors are independent entities engaged to examine the financial statements of a fund, providing an unbiased assessment of its financial health and operations.

This independence is crucial because external auditors do not have a vested interest in the fund’s performance or management, which allows them to provide an objective review. Their role includes verifying that the fund's financial reports are accurate and comply with relevant accounting standards and regulations, which helps protect investors' interests and builds trust in the financial system.

By using external auditors, collective investment funds comply with regulatory requirements designed to enhance governance and mitigate risks associated with misrepresentation or errors in financial reporting. This process assures stakeholders that the fund's financial practices align with laws and industry standards, ultimately promoting greater confidence among investors.