How Does the Role of External Audit Support Corporate

1How Does the Role of External Audit Support Corporate Governance?
Running head: HOW DOES THE ROLE OF EXTERNAL AUDIT SUPPORT
CORPORATE GOVERNANCE?
How Does the Role of External Audit Support Corporate Governance?
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2How Does the Role of External Audit Support Corporate Governance?
Table of Contents
Title............................................................................................................................................3
Rationale....................................................................................................................................3
Research Objectives...................................................................................................................5
Research Questions....................................................................................................................6
Literature Review.......................................................................................................................7
External Audit Supports Corporate Governance....................................................................7
Importance of External Audit in Corporate Governance of an Organisation........................9
Role of External Auditor in Business Organisation.............................................................11
Research Methodology.............................................................................................................14
Conclusion................................................................................................................................16
References................................................................................................................................17

3How Does the Role of External Audit Support Corporate Governance?
How Does the Role of External Audit Support Corporate Governance?
Title
The title of the study to be investigated is “How Does the Role of External Audit
Support Corporate Governance?”. The study will aim to understand the role related to the
external auditor within the corporate governance of a business organisation.
Rationale
In recent years, it has been viewed that auditors need to play a crucial and direct role
for the purpose of establishing effective governance in an organisation. Herein, by conducting
this study, the duties, as well as the role of external auditors can be determined in a successful
manner. Over the years, the role associated with the auditors has changed, as they need to be
stricter regarding the overall process. Thus, this study provides an adequate view with respect
to the reasons for performing an active role in an organisation. Besides, corporate governance
in the present scenario is considered to be an essential aspect of a business organisation. This
has gained high popularity after the global financial crisis. At present, having effective
corporate governance is perceived as one of the fundamental conditions, which is required to
be registered in the stock market exchange (Al-Baidhani, 2014). In this context, corporate
governance mainly emphasises promoting transparency along with fairness in an organisation
mainly through proper monitoring of the performance, as well as, ensuring accountability.
Thus, the importance of external auditors is perceived as a protector for maintaining a
corporate government in the business (Keith, 2019). Hence, the reason for conducting this
particular study has been to investigate the function of the external auditors with respect to
corporate governance in a business organisation. Additionally, conducting this research
would also provide assistance in understanding the ways through which performing an
external audit can help in supporting corporate governance in a company. External audit in

4How Does the Role of External Audit Support Corporate Governance?
corporate governance can be considered to be essential due to the various benefits it
possesses. Thus, in this regard, the study will further provide information related to the role
of external audit in corporate governance.
The external audit is perceived as a process, which is subjected to direct along with
indirect influences (Kong & Shyaka, 2018). Contextually, the impact of external auditors,
especially in the field of corporate governance can be highly understood through this process.
The external audit is mainly focused on detecting errors along with misstatements in the
financial statement of a company. Furthermore, it also helps in reporting misstatement, as
well as, errors. Hence, this study will also focus on highlighting the importance of the
Sarbanes–Oxley Act, which was formulated in the year 2002. In relation to the role of the
external auditor, one of the most important roles with respect to corporate governance is to
safeguard shareholder’s interest. This is due to the fact that the process of external audit is
performed in an independent manner in order to avert any kind of influence by the company
(Keith, 2019). Hence, by conducting this particular research study, detailed understanding
regarding the impacts or effects of external audit in corporate governance can be gained. It
must also be noted that a company often conducts an external audit with the intention of
obtaining reliable and accurate data and information. Correspondingly, with the support of
conducting this particular study, the role, which is played by the external auditor related to
risk assessment, as well as, mitigation planning can also be understood in details. Another
reason for conducting this study has been to gain adequate knowledge relating to role in
managing crisis by developing efficient corporate governance.
Furthermore, it needs to be noted that the role or function, which is conducted by the
external auditor, can help in developing and maintaining an adequate relationship with the
overall regulators. In this regard, most of the regulators are found to be highly supportive in