EXTERNAL AUDITOR Meaning and
Definition
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An external auditor refers to an individual or a professional firm that performs an independent examination and evaluation of a company's financial records, statements, and processes. This auditor is typically appointed by a company's board of directors to ensure transparency, accuracy, and reliability in the financial reporting of an organization.
The main objective of an external auditor is to express an opinion on whether the financial statements of a company present the true and fair view of its financial position, results of operations, and cash flows. These auditors are responsible for verifying the conformity of financial information with generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS).
The scope of work for an external auditor includes assessing the effectiveness of internal controls and risk management systems, examining the validity and accuracy of financial transactions, and ensuring compliance with relevant laws and regulations. They conduct detailed examinations of accounting records, supporting documents, and other relevant evidence to form an unbiased opinion on the financial health and integrity of the organization.
External auditors play a crucial role in providing assurance to stakeholders, such as shareholders, investors, creditors, and regulators, regarding the reliability of financial information. Their findings and opinions are usually communicated through an audit report, which provides an independent and objective view of the company's financial statements. The report can either give an unqualified opinion, indicating that the financial statements are fairly presented, or express qualified opinions or disclaimers if there are material misstatements or limitations in the audit scope.
Overall, an external auditor ensures the credibility of financial reporting, contributes to maintaining the trust of various stakeholders, and helps enhance the transparency and accountability of organizations.
Common Misspellings for EXTERNAL AUDITOR
- wxternal auditor
- sxternal auditor
- dxternal auditor
- rxternal auditor
- 4xternal auditor
- 3xternal auditor
- ezternal auditor
- ecternal auditor
- edternal auditor
- esternal auditor
- exrernal auditor
- exfernal auditor
- exgernal auditor
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- ex5ernal auditor
- extwrnal auditor
- extsrnal auditor
- extdrnal auditor
- extrrnal auditor
Etymology of EXTERNAL AUDITOR
The word "external auditor" is derived from two different sources.
1. The term "external" originates from the Latin word "externus", meaning "outside" or "external". It refers to something that is situated outside of a particular entity or organization.
2. The term "auditor" comes from the Latin word "auditor", derived from the verb "audire", which means "to hear". In ancient Rome, certain individuals were appointed to listen to and verify the accounts and financial records of governmental agencies. Over time, the term expanded to include examining, investigating, and verifying financial statements and records.
Therefore, the combination of these two terms, "external" and "auditor", results in a phrase used to describe an individual or organization that conducts an independent assessment of another entity's financial statements and records from an external standpoint.
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