Why Do Companies Hire External Auditors?
No doubt, services of external auditors should always be admired. But before arguing much on their professional services, some confusion should be removed here that auditors do no prepare financial statements. Many people confuse their roles with finance department of a business. Preparation of accounts is prime responsibility of accountants and financial controller of company. Auditors for accountants are hired so that they can form their independent opinion on accuracy, relevance and appropriateness of financial statements. That is why, it is always a compulsion to recruit only independent auditors who are not involved with any business of a company.
Besides of this reality that getting audited financial statements is a legal requirement, one is also encouraged to take a look on its other blissful provisions which are a) checking appropriateness of accounting record b) assessing effectiveness of internal control and accounting system c) revamping of work flow and operational aspects d) giving true and fair picture of companies to owners/shareholders e) trust building in all stake holders etc. Here, it is not difficult to envisage how important is that for every company/business to hire qualified accounting firms for obtaining audit reports. Also, one should have to consider below mentioned superlative reasons of recruiting independent external auditors:
Management of compliance issue
Sometimes management of a business is not aware about compliance issues due to their lack of knowledge and expertise. There can be several compliance issues such as a) tax compliance aspects b) inquiry and investigation initiated by legal authorities c) legal litigations and proceedings d) preparation of accounts as per Internal Accounting Standards. Note that external auditors do not directly engage in these issues but highlight them in their audit report so that shareholders/management can take remedial actions on time. In this way, well management of compliance and legal issues can be pledged,
Accuracy of historic accounting records
Historic accounting records are very important. Companies/businesses on the basis of these historic trends prepare projections for future. Now, is there any room of non-accuracy and irrelevance of accounting records? Undisputedly, every company/business always demand true, fair and accurate accounting records so that they can also monitor an actual performance of a business. It is another factor which would be managed well after recruiting competent and proficient external auditors and accounting firms.
So, there are number of reasons to believe that services of auditors are not merely important for a business but actually assure direct supervision on work of accountants and finance department of a business. Moreover, in Australia, because almost every reputed accounting firm is also working and communicating with its existing and potential clients via online medium, there would be no issue in finding of such legal and finance professionals.