Role of External Auditing in Promoting Corporate Accountability

Running head: CRITICALLY DISCUSS THE ROLE OF EXTERNAL AUDITING IN
PROMOTING CORPORATE ACCOUNTABILITY
Critically Discuss the Role of External Auditing in Promoting Corporate Accountability
Name of the Student
Name of the University
Author’s Note

1
CRITICALLY DISCUSS THE ROLE OF EXTERNAL AUDITING IN PROMOTING
CORPORATE ACCOUNTABILITY
Board of Directors
Investing Public
External Auditors Regulators
Internal
ShareholdersAudit Committee
Introduction
The responsibilities of the auditors are the prevention, detection and reporting
of financial fraud, errors and illegal acts. The auditors are responsible for confirming
the accountability and stewardship of the clients’ management (Chandler, Edwards
and Anderson 1993). The purpose of this is the reduction of the possibility that
managements’ statements of stewardship include mistakes as a result of measured
misstatements and innocent errors. The former may take the form of either
manipulation of financial statements’ information or falsification of accounting records
(Chandler, Edwards and Anderson 1993). In the presence of all of these aspects, it
is needed for the companies’ auditors to ensure the presence of corporate
accountability in the clients’ business operations. The main aim of this essay is to
conduct a critical discussion on the role of external auditors in the promotion of
corporate accountability within the business organizations.
Discussion

2
CRITICALLY DISCUSS THE ROLE OF EXTERNAL AUDITING IN PROMOTING
CORPORATE ACCOUNTABILITY
Figure: Place of the External Auditor in an Organization
(Source: oecd.org 2019)
The above figure shows the place of the external auditors in the
organizational structure. As per the above figure, external auditors have direct
contact with the directors, regulators and the audit committee and this aspect helps
the auditors in maintaining corporate accountability with the organizations. The
auditors are needed to ensure certain aspects with the aim to maintain corporate
accountability within the organizations (oecd.org 2019). The following discussion
sheds light on these aspects for the purpose of promoting corporate accountability.
It needs to be mentioned that the external auditors represents the interest of
the stakeholders and it is considered as one of the major responsibilities of the
external auditors for promoting corporate accountability is to protect the interest of
the shareholders (Harrison and van der Laan Smith 2015). It is possible for the
external auditors to protect the interest of the shareholders in the presence of the
fact that the external auditors prepare the audit report while maintaining the required
audit independence from the influence of clients’ managements (Harrison and van
der Laan Smith 2015). It is considered as one of the major responsibilities of the
external auditors to report on the state of the financial standing of the companies
along with attesting the validity of their financial reports released for the shareholders
to inform them about the true financial performance and position. At the same time,
the external auditors ensure on the fact that the boards of directors of the clients
receive reliable as well as accurate financial information for the purpose of decision-
making. It needs to be mentioned that the boards of the clients can question external
auditors about the view and assessment of the appropriateness of the used