Role of Auditors

In: Business and Management

Submitted By vitomccorleone
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Question: Why is it important for external auditors to be independent? Relate your answer to the primary role of external auditors. Give examples of specific ways the lack of auditor independence may impact adversely on an audit.

Auditing can be defined as the systematic process of obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.
An external auditor performs independent, third-party reviews all the financial records of a company or corporation. He evaluates all accounting, payroll and purchasing records, as well as any documents related to investments, stocks or loans. His job is to provide an accurate, unbiased analysis of the company’s financial condition. Its objective is to determine, among other things, whether the accounting records are accurate and complete, prepared in accordance with the provisions of GAAP, and the statements prepared from the accounts present fairly the organization's financial position, and the results of its financial operations.
Internal auditing is also done and an internal auditor is appointed by the firm. His functions are more towards the firm as he is appointed by it. He looks into the strategies and goals of the firm and assesses them to near perfection. He provides helpful advices and reports on the firm’s growth. But the role of an external auditor is a bit more different from the internal auditors. An external auditor mostly comes into play during the scams and getting government verification on the related firm’s accounting details. In such cases, first an external auditor approved by the government should be appointed by the firm. The government appoints an external auditor who is not connected to the company, as it may be construed as…...

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