The onset of the twenty-first century saw corporate scandals at Enron and its auditor, Arthur Andersen, rock the foundations of the financial markets, precipitating the greatest stock market collapse in U.S. history. These Wall Street scandals made clear that American accounting practices and corporate governance were not all that they seemed.

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	In performing an audit, the external auditor conducts a thorough and independent review of an asset, liability, activity, organization, or set of financial statements, with the prime responsibility being to plan and perform the audit in such a way as to obtain sufficient assurances that misstatements caused by error or deception are detected.

According to a contemporary Gallup survey, the public’s level of confidence in the American economy and its key officials in 2002 reached a low not seen since 1981. This brought with it some major changes to what had been well-established financial auditing standards and procedures. The financial scandals at Enron, Worldcom, and a host of other companies compelled the investing community and the U.S. Congress to reform the auditing process.

Auditing first emerged as a full-fledged profession in the United Kingdom in the nineteenth century. While there is no single or satisfactory definition of the term auditing, according to Virginia Tech’s online glossary, it is the “independent review and examination of records and activities to assess the adequacy of system controls, to ensure compliance with established policies and operational procedures, and to recommend necessary changes in controls, policies, or procedures.”

External accounting auditor jobs are concerned with matters that are material to the financial statements of businesses and corporations. In performing an audit, the external auditor conducts a thorough and independent review of an asset, liability, activity, organization, or set of financial statements, with the prime responsibility being to plan and perform the audit in such a way as to obtain sufficient assurances that misstatements caused by error or deception are detected.

In so far as methods of accounting principles are concerned, the auditor is entirely within his domain in making suggestions and recommendations on matters of business policy. As an external auditor, part of an accounting auditor’s job involves evaluating a company’s internal audit controls. That said, customers expect more: they don't want an auditor to just find the missing link, they want it fixed. Customers want the auditor to be able to bring a consultant in who can make any necessary changes.

Clients expect auditing to stimulate them to set up the right procedures, policies, and structures that underlie good risk management and, therefore, good business management. Internal accounting auditing jobs evolved to satisfy this crucial need, and the most effective internal auditors keep management and organizational objectives at the forefront of their own planning and activities. Thus, while external auditing focuses on the evaluation of financial statements, internal auditing encompasses financial and operational efficiency reviews, compliance testing, and environmental audits.

Conclusion

While it is not the job of an auditor to act as an aggressive watchdog over a company’s management, a good auditor should always take a position of professional skepticism, and should never become party to fraudulent activities. Conscientious auditors give plenty of notice as to what they need to perform their duties. This includes documenting all information, findings, evidence, and conclusions that lead to the discovery of suspect activities.

On the net:

Will Enron’s Auditor Sing?

Audit Procedure

Dictionary of Financial Terms

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