Page 46 - Banking Finance November 2020
P. 46

ARTICLE





         ROLE OF





         AUDITORS AS A




         WATCHDOG IN




         A BUSINESS




         ENTITY








         T          he great philosopher Desiderius Erasmus has  auditee unit.The power of appointment and dismissal of the



                                                              auditor lies with the auditee unit's management and this
                    said "Prevention is better than Cure". It is in line
                                                              sometimes also leads to undue influence of the
                    with this philosophy that a system of audit  has
                    been developed comprising of auditors working
                                                              supposed to be a watchdog on behalf of the shareholders
         directly with the businesses to monitor the ways in which a  management on the working of the auditor. An auditor is
         business entity is doing its business .The business community  and other stakeholders and as such, the integrity of the
         play a very important part in the growth of the economy of  auditor is very sacrosanct and should not be influenced in
         the country. Any adverse effect on a business not only  any way which is detrimental to the shareholders' interest.
         affects the promoters but also their employees, suppliers,  An auditor's responsibility is not limited to the shareholders
         customers, and other players in the business cycle. In short,  only because an audit report is a public document and is
         it has a contagion effect on the economy and the severity  relied upon by various stakeholders in the economy like
         of which depends, among other factors, on the size of the  financial institutions, government bodies and the general
         company and the business segment it is operating in.  public. Hence, it can be said that the auditors play an
                                                              important role in ensuring good health of the economy of
         An auditor has responsibility towards the shareholders of the
                                                              the country as well.
                                About the author              But, in recent times, there have been some disturbing

                         Arun K Bhardwaj                      developments in the financial sector that have led to raising
                         Manager (Research)                   of serious questions on the independence and impartiality
                         State Bank Institute of Credit & Risk  of auditors while reviewing the financials of companies.
                         Management, Gurugram                 These incidents have led to demands for an overhaul of the
                                                              audit system.

            46 | 2020 | NOVEMBER                                                           | BANKING FINANCE
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