2007-10-21 04:43:10 · 3 answers · asked by shan p 1 in Business & Finance ➔ Small Business
Not only is it essential, it is also a professional requirement. An external auditor is a Certified Public Accountant. The "Public" portion means that the auditor is reporting the findings of an audit to the public, not to the company that hired the auditor. The public depends on the auditor being objective in the examination of the financial statements on which he is expressing an opinion. The auditor cannot be objective if he has a financial interest in the business being examined. Therefore the auditor must be totally independent of the business. He cannot express an opinion on a business in which he owns stock, or one that hired a family member as an employee,
2007-10-21 04:51:07 · answer #1 · answered by Anonymous · 0⤊ 0⤋
If their paycheck came from the company ,
Their loyalty would be there and more prone to cover up fraud .
eg : Enron . . .
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2007-10-21 04:47:24 · answer #2 · answered by kate 7 · 0⤊ 0⤋
So they aren't answerable to anybody that they are auditing.
2007-10-21 04:52:57 · answer #3 · answered by pete 6 · 0⤊ 0⤋