An External Report is a kind of organizational report which is intended for use of outside people or for outside circulation. It never contains any sensitive or critical organizational information unless required for achievement of a particular purpose. These include financial reports such as balance sheet, cash flow statement etc.
On the other hand, Internal Report is a kind of organizational report which is circulated on the inside only. Its circulation is very limited as it contains critical and important information. Examples include internal employee valuation report, internal auditor's report etc.