Essay: External Audit
This audit is undertaken to ensure no discrepancy exists in the account and book keeping of the business from the reported financial statements and figures. The external audit is mandatory as per the GAAP as well as it focuses on ensuring that the business is reporting its financial, profits, expenses and income in the required manner while adhering to GAAP rules as laid known by the AICPA. Fraudulent activities and GAAP violations are focused upon in the external audit. Violations of the GAAP by businesses who are required to comply to are strongly condoned and penalties in the form of imprisonment and heavy fines are levied on businesses that are found to be in violation through the audit.
A well made audit report from an authorized and well reputed accounting/ audit firm helps generate a goodwill and reliability in the business. As a result more investors are willing to invest in the business as they can view the financial statements as being reliable and depicting the actual financial status of the business.
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