Final answer:
The factor that conceptually distinguishes external auditing from internal auditing is d. Constituencies. External auditing differs from internal auditing mainly in the constituencies they serve.
Step-by-step explanation:
External auditors are independent professionals hired by and reporting to the shareholders or other outside parties to ensure that the financial statements of the company are free from material misstatement and comply with applicable accounting standards and regulations. They provide an objective assessment and assurance that the financial reports are fair and accurate.
On the other hand, internal auditors are employed by the organization itself. Their primary role is to provide independent, objective assurance and consulting activity designed to add value and improve the organization's operations. They help an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal auditors work for the internal stakeholders of the company, such as management and the board of directors.
While both types of auditing involve tests of controls and substantive tests, and require a high level of education in accounting and auditing principles, it is the different constituencies they serve that fundamentally separates their roles.