Explanation:

- Option 1: Internal

- When an auditor is an employee of the organization being audited, it’s called an internal quality audit.

- Internal audits help organizations evaluate compliance and improve processes from within.

- Correct Answer: These audits are crucial for internal controls and self-assessment.

- Option 2: External

- Involves auditors from outside the organization.

- Typically used to provide an independent evaluation.

- Useful for ensuring stakeholders about the integrity of financial and operational processes.

- Option 3: Compliance

- Focuses on ensuring adherence to laws, regulations, and internal guidelines.

- Can be part of either internal or external audits.

- Essential for minimizing legal and financial risks.

- Option 4: Both A & B

- Not applicable; an audit cannot be both internal and external simultaneously.