External Auditor Of An Organization Essay

External audit- Independent auditors examine our business to ensure compliance with regulations, ISO 14001, and our own standards.

Financial investors rely on the accuracy of company’s financial statements so they depend on external auditors to insure that the financial statements are free of any material misstatements. 3. In the

1) Internal Auditors are expected to add value to the organization through improved operational effectiveness. In addition, their responsibilities include all the following except:

The auditor’s responsibility is to express an opinion on the fairness of the presentation of the financials, and an opinion on the effectiveness of internal control of financial reporting, including an opinion on whether management’s assessment of internal control is fairly stated.

The external audit focuses on identifying and evaluating trends and events beyond the control of a single firm. An external audit reveals essential opportunities and threats confronting an organization so that managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of threats.

External auditors (only those registered with the Public Company Accounting Oversight Board) were required to review these financial statements and issue opinions on the accuracy of the financial reports and whether effective internal

Fullerton and Durtschi, (2012) in their study found that internal auditors should adopt an elevated attitude of skepticism, as they are the first line of defense for finding fraud within a firm. Internal auditors, have an intimate knowledge of the workings of a firm, the corporate environment, as well as employee activities are in a unique position to spot many of the symptoms of fraud to which an external auditor may not be aware. Thus internal auditors should be more skeptical and use their knowledge to enhance their fraud detection in firms (Fullerton and Durtschi, 2012). This is one of the key inputs into the factors that drive audit quality as external auditors rely on inputs from internal auditors in obtaining the evidence they require to produce the audit report (Fullerton and Durtschi, 2012).

I-4) The role of the external auditor is to audit the financial statements of a company to check for accuracy and completeness and then issue their opinion on the reliability of the financial statements. The external auditor is independent of the firm that he or she is auditing so they report to their bosses in their company and issue reports for the public to see.

Internal auditors cannot effectively provide an analysis on the company’s internal dealings as they are part of the company. External auditors, however, can observe these processes from the outside and then determine where the funds of the company and whether the dealings adhere to the regulations. Using external auditors in a company prevents conflict of interest from happening. Conflict of interest is a situation where an individual or organization has multiple interests and of those multiple interests, one could possible corrupt the motivation for an act on the other when the auditor has any kind of beneficial interest in their client’s performance. In other circumstances, there is also the threat of familiarity where auditors become

Code of corporate governance ensures the effectiveness of an audit is in the interests of stakeholders and stockholders and that is the reason why they are depending on auditor mostly. An auditor has the power to detect wrongdoings in the management and report on the company objectively. An independent auditor may play their roles effectively and maintain good governance. They can as well remove bias from the company’s financial reports. Though, on the availability and effectiveness of quality auditors, some say that East Asian auditors have insufficient expertise or willingness to supply quality audits. There is also some concern that the auditors’ monitoring role can be in confrontation with their consulting activities with the client firms, an issue not unique in Asia. Also, the disciplinary mechanisms for the auditors may turn to be poor.

The need for an external audit in the case of companies arises primarily from the

According to the Institute of Internal Auditors (IIA), (2011), the internal auditing is a team of consultants, a department and a division or other practitioner which independent, have objective assurance and conduct a consulting activity which is designed to add value and improve the organization operations. The internal auditor can help an organization in achieving its objectives by bringing a discipline and systematic approach in order to improve and evaluate the effectiveness of risk management, control and governance process.

The aim of this essay is to study the function of external auditors in order to analyze why it is important to be independent. The primary mission of external auditors is to review and evaluate all the financial records of a company or corporation. They provide an objective opinion on the organization’s financial statement and effectiveness of the accounting polices in order to help management to make decisions. If the independence of the external auditors is impaired, the public will doubt the quality of professional auditing services, and the consequence would be very serious, just like the bankruptcy of Enron led to the disorganization of Arthur Andersen, once a giant accounting company in the world. In order to maintain and increase

The role of internal audit is to provide independent declaration that an organization’s threatadministration, governance and internal control processes are functioning effectively. Internal auditors deal with concerns that are essentially important to the existence and success of any organization. Unlike external auditors, they aspect beyond financial possibilities and statements to reflect wider problems such as the organization’s reputation, development, its power on the location and the approach it treats its organizations.In summary, internal accountantssupport organizations to thrive.

According to Hector Perela, (2009), Internal auditing function with other intervention mechanisms like financial reporting and external audit to helps maintain cost-efficient contracting between owners and managers. It is designed by government agencies to add value and improve organizational performance. It helps organizations accomplish their objectives by bringing a systematic, disciplined approaches to evaluate and improve the effectiveness of risk