From the course: Advanced Bookkeeping Techniques
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The role of external auditors in the accounting cycle
From the course: Advanced Bookkeeping Techniques
The role of external auditors in the accounting cycle
- One of the greatest safeguards in the financial reporting system in countries around the world is the requirement that publicly traded firms have external audits of their financial statements. - External auditors examine an organization's financial statements to determine if those statements are prepared and presented in accordance with Generally Accepted Accounting Principles, GAAP and are free from material or significant errors. External audits are performed by Certified Public Accounting firms, that CPA firms. You can think of a CPA firm as a group of freelance accountants and other professionals who do consulting projects and audits for many different companies. - In the United States, CPA audits are required by the securities and exchange commission and the major stock exchanges for all companies who shares are publicly traded. - Companies that are not public also request CPA audits because in addition to…
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