Role of external auditor

Published information has the benefit of an independent audit. Despite the headline news of the collapse of major companies, this process is still relevant and, mostly, reliable. However, it only ensures that certain rules have been followed and certain standards adhered to. It does not ensure that the information produced by the company is in a comparable format to others or check whether or not the rules have been followed in one of the many differing and allowable ways. You should also remember that the auditors know the standards and conventions discussed earlier but they still rely on the business knowledge of the senior management of the company to set these in context.

The Auditing Practices Board (APB) Firms auditing the auditor IFAC

This was established in 2002 and is part of the Financial Reporting Council. It is committed to leading the development of auditing practice in the UK and the Republic of Ireland in order to: establish high standards of auditing; meet the developing needs of users of financial information and ensure public confidence in the auditing process.

‘We have long recognized that a fundamental way to protect the public interest is to develop, promote, and enforce internationally recognized standards as a means of ensuring the credibility of information upon which investors and other stakeholders depend.’ IFAC’s boards set the following standards:

 international standards on auditing, assurance engagements and related services

 international standards on quality control

 international code of ethics

 international education standards

 international public-sector accounting standards.