Why do you think it is important for companies to receive outside audits on their company’s books?

Question

Why do you think it is important for companies to receive outside audits on their company’s books?

Answer 1

Outside Auditors check up what the book says impartially meaning if insiders are allowed to do it they won't sometimes give a true picutre of the performance of the company. They might cook the book to make it look better than what actually is which the share holder might not enjoy to have. Outside Auditors do the auditing and gives a certificate of authenticity to the company books for the accounting year though they are paid by the company which is the share holders.

Answer 2

Yes I do think that it is important. Since the auditing company is an outside company, they have nothing to gain or lose by reporting their findings. They are a nuetral party that is there just to report what they find. I personally don't like participating in the SOX audits, but I think it is important for the employees. Remember the Enron scandal. If someone outside the company was completing an audit, those people wouldn't have lost all that they did. There needs to be a checks and balance system to protect the employees against greed.

Answer 3

It's important for 2 reasons:
1) Insiders hiding things from others within the company can be found by outsiders.
2) It is helpful to get an outsiders view on finances to make sure that the numbers line up properly - especially if it is a publicly traded company.

Answer 4

The original idea of Independent External Audits was that the Auditor would represent the Shareholders and report any major Fraud or manipulation of the Accounting Records back to the Shareholders. Unfortunately, Audit Fees have become so large that, generally, the External Auditors refrain from any negative reporting for fear of loosing the job. Thusly the External Auditors have become the Puppets of Top
Management and the Board of Directors.

Answer 5

Just like the checks and balances that our government uses to make sure one branch does not deceive another branch. If an internal audit was performed, some items might be overlooked, or burried. By having an outside company do an audit - it will be "blind" and more thorough, without any influence internally for what might be over looked.