It is not strenuous to ascertain why do people hire independent auditors? Basically auditors are engaged for accounts and financial statements. Like, whenever it would be a case of auditors for accountants, note that one would talking about hiring auditors for forming an audit opinion on financial statements of a company. So, if we take a look on number of factors due to which businesses hire auditor, unquestionably the list would include countless superlative provisions. Attention should be given on some fruitful aspects which are a) review of accounting system and draft financial statements of management b) forming of independent opinion as either accounts are giving true and fair view c) assessing an appropriateness and relevance of accounting record d) reporting on effectiveness of internal control of a company e) reporting on any matter which auditors feel of significant nature etc. Here, main thing which should be noticed that auditor report is always addressed to shareholders and owners of business. People sometimes confuse that audit report is issued in the name of directors and senior management of a company. They have to know that they basically report on the work done by accountants and senior management and so, form their independent opinion to shareholders.
Enhance business understanding in shareholders
No doubt, obtaining an audited report and audited financial statements is a legal obligation. Companies are usually bound to hire auditors because of corporate law requirement in every state. However, one should have to accept that its major essence rest with enhancing understanding of shareholders regarding the operational effectiveness of a business. This is because in an audit report, they talk about internal control system, their audit procedures evaluate that to which kind of business risks a particular company is exposed to, they report on work done and competent of management/accountants of a company. Under this mechanism, shareholders and owners of a company obtain a true picture about their business and hence, their overall understanding about the business would be improved.
Preparation and maintenance of accurate accounting record
Everyone knows that preparation and maintenance of accounting record is management responsibility and auditor has nothing to do with it. However, as auditor review the work of accountants and drafted financial statements, this aspect usually culminates into preparation of accurate accounting records and accountants. Of course, there would be no need to mention how important is to get accurate accounting figures for any kind of business irrespective of its size, nature and operations.
Hence, denial should never be drawn on this reality that services of auditors are very pertinent for any kind of company/business. It means that either there is any legal requirement or not, everyone should have to think about recruiting most competent and skillful auditors because this decision is directly related to improve overall performance of a business/enterprise.