Role of Auditors in

Corporate Governance
- Devansh Srivastava
 Auditors are those individuals or a firm appointed by the company to
Who are auditors?
audit their financial records. Auditors are authorized to review and
verify the accuracy of the company’s financial records and ensure
that companies comply with the tax laws. An auditor can have control
over management and thereby acting as a sort of assurance to the
shareholders that they will have full disclosure of correct
information.
  Internal Auditors-
Types of Auditors
Internal auditors are employed by the organizations they audit to
provide in-house, independent and objective evaluation of financial
and operational business activities, including Corporate Governance.

 External Auditors-
External auditor/ statutory auditor is an independent individual or
firm engaged by the client to the audit, to express an opinion on
whether the company’s financial statements are free of material
misstatements, whether due to fraud or error.
 Corporate governance is the system of rules, practices, and
Governance?

processes by which a firm is directed and controlled. Corporate

Corporate

governance essentially involves balancing the interests of a

company's many stakeholders, such as shareholders, senior
management executives, customers, suppliers, financiers, the
government, and the community.
Governance important?
Why is Corporate
Corporate governance is important because it creates a system
of rules and practices that determine how a company operates
and how it aligns the interest of all its stakeholders. Good
corporate governance leads to ethical business practices, which
leads to financial viability.
auditors and corporate
Relationship between
 The role of auditors in the area of Corporate Governance is to
provide assurance that the company is in rational compliance with
the laws and is conducting its affairs fairly and maintaining
effective control against employees conflict of interests and frauds.
 Corporate governance essentially involves balancing the interests of
Governance

a company’s stakeholders which includes shareholders,

management, customers, suppliers, financiers, government and the
community.” To do so the main prerequisite is to have a
transparent, clear, concise and real picture of the company’s
financial affairs which is done by the Auditors.
  Promote accountability-
The researchers have found out that extent evaluating controls and
Corporate Governance
How Auditing affects
operations as a role of auditors enhances corporate governance. Measures
and policies introduced by external auditors are designed to compel
accountability in the workplace.
 Represent shareholders interests-
One of the many important roles of a professional Auditing in India in
corporate governance is to protect the interests of shareholder and
stakeholders of a company. It is made possible by conducting independent
reports by the auditors and not being influenced by the company.
 Crisis management-
By developing efficient crisis management plans to be used in the event of
allegations of corruption or fraud, an auditor helps in ensuring good
corporate governance.
 Risk management and mitigation planning-
Auditors help in promoting corporate governance by conducting a period
risk assessment. External auditors reassess the security measures that a
company has in place against corruption or corporate fraud. Additionally,
they also analyze the on the whole risk tolerance of the company and the
efforts that the company has made towards lessening the risks. For
example, if a government agency or a company has a system with an under-
performing whistleblower, then the efforts may be made to improve the
system in question.
 Maintain Strong Relationship With Regulators-
The efforts put in by an external auditor helps in fostering a good
relationship with regulators. Mostly if the companies and agencies have
transparent operations, the regulators are supportive of them. Once an
auditor attests the company’s disclosures, it is more likely that the
regulators also show their trust towards them.
- Thank You