Information about Independent Auditors

What are Independent Auditors

What are independent auditors? In relation to business accounting, independent auditors are the external auditors involved in examining a company’s financial statements and expressing their opinion based on their review of the company’s records. In order to give their opinion as to the fairness of the financial statements, the internal auditors should have passed the licensee examination given by the government to become a Certified Public Accountant (CPA). Hence, independent auditors are CPAs.

CPA Stand's for 
(CPA)=  "Certified Public Accountant"

What are independent auditors to the business community? Independent auditors examine the financial statements and express their opinion on the fair presentation of the reports. The auditor’s report is where opinions can be communicated to indicate whether the company adhered to generally accepted accounting principles consistent with that of the preceding period. 

What are independent auditors in relation to the audited financial statements? Normally, business entities have their own accountants who are in charge of the financial statements preparation. These accountants lack the independence in the course of preparing the financial statements. For this reason, to give credibility to the financial statements, an independent auditor is hired. 

What are independent auditors compared to the responsibilities of management on the financial statements? The responsibility of the independent auditor is to form and express an opinion. Management’s accountability is to adopt sound accounting policies, maintain effective accounting systems, safeguard the assets and devise an adequate internal control. 

What are independent auditors in terms of scope of audit? The independent auditor must exercise good judgment in the determination that are important in the circumstances to serve as reasonable basis in expressing an opinion.

What are independent auditors in assessing the sufficiency and reliability on the contained information in the financial reports? The independent auditor is required to make a study and evaluation of the existing accounting systems and current internal controls in order to determine the extent and timing of audit procedures.

What are independent auditors to investors? The certification of the independent on the financial statements is some sort of reliability and credibility on the part of investors that the reports can be used as basis in arriving at investment decisions.

What are independent auditors not supposed to do? They must not lose independence in mental attitude since this is the primary responsibility that the independent auditor must possess. In like manner, the audit tests are not designed to discover specific irregularities but to discover general misstatements that are material in nature. However, in the course of examination wherein fraud is uncovered which lead to material misstatements, this will provide enough reason to extend the audit procedures to confirm the extent of irregularity.