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External Auditor Role

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THE GOVERNANCE ROLE OF AN EXTERNAL AUDITOR
What is an external auditor?
External auditors are employees of a public accounting firm which has been engaged to conduct the audit of a particular company’s financial statements (audit client). The external auditor’s responsibility is to provide assurance to the general public regarding the truth and fairness of the presented financial statement (audit client). Since the public relies heavily upon an audit opinion published by a public accounting firm, to make investment decisions. It is imperative that they view accounting firm as being independent, objective and free from the influence of the audit client or any other parties.
Role of external auditors
External auditors play a critical role in …show more content…

This is possible because external auditor’s reports are conducted independent of the company’s finance and affects to the validity of financial reports that may have been released. They ensure that the board may also question the auditor’s views and assessment on the appropriateness of the accounting principles used by a company. So therefore shareholders relay their trust in external auditor’s opinion as it is believed that they act according to the professional rules and also IFRS (International Financial Reporting Standards) for that reason, the external audit opinion is mostly likely to be treated as a true valid …show more content…

auditors ensures that an organisation does not show or lower amount of profit to pay less taxes or reduce any figures in its financial statement in aim of not paying tax. Auditors automatically reduce government fraud taking place in the country.
Role of external auditor in corporate governance
• Promote accountability
External auditors may introduce measures and policies designed to compel accountability in the workplace for instance, auditors could recommend penalties for office who manipulate financial statement by inflating figures or cooling accounting number penalties for such acts could include stripping the managers of his/her position or his/her compensation such as reducing annual bonuses and even pensions.
• Maintain strong relationship with regulators
The efforts of an external auditors help a good relationship with regulator most regulators or supportive of companies and agencies that appear to have transparent operation. External auditors evaluate the organisation of a company for compliance with regulations. Regulation is also more likely to trust company also closure after an auditor affects to

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