The Nature of an External Audit Assignment Help
The Nature of External Audit Homework Help from Our Tutors
Companies will have to take a decision based on nature of the external audit. So what is an external audit? It means that a company will collect information about business prospects outside the purview of business and it also means that certain sentences are evaluated on merit.
A company is not allowed to invest in business activities just because a report comes and states that stock market is rising. It does not mean or implies that company will earn a profit, but if an external audit states that there is a surety in the fact that GDP will grow this much within the next two years, and then a company can enter into a new business like opening new branches.
The aim of the external audit is to have a finite option in front of company.
Speciality of external audit
A company will have to take external auditing when a company is accused of cheating. Assume that a company has been levelled charges of showing less profit in the book and there is doubt arsing about the veracity of company.
A company will be forced to have an external auditing, and it shows that profit is indeed down due to recession or some other factors then everything will be normal for a company.
There is also another aspect of external audit in which the shareholder’s interests is taken into consideration and wealth maximation techniques using profit maximation is discussed in detail.
The ability of a company to understand government needs and fine-tune strategies is taken into consideration using external auditing. Assume that a car manufacturing company is making automatic and manual cars and government comes out with a green policy that sates that electric cars are promoted then a company will have to make it.
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