Info 1: external auditor definition
Info 2: how external auditor works
Info 3: external auditor vs certified public accountant
Info 4: example of external auditor
Quick pick:
Person who works as a public independent auditor with authorization of the government other than works of under single employment are known as external auditor.
Opening information:
External auditor breaks into two words external and auditors. External means things which are used or done outside, auditor means accountant checker.
External auditor means the person who conducted the checking for accounting as outside party. So now lets have a look what is a external auditor, how the external auditor works, and what is the difference between the external auditor and certificate public accountant, finally one brief example about the external auditor.
Info 1: External auditor definition
Wiches is a publicly trading company, it’s primary purpose is to sold more quality and branded watches into the market consumers, which this industry been servicing in the market for almost 12 years.
However its business daily credits and debts are recorded by its own employed accountant that hired by the Wiches company, next after every 90 days its whole recorded operation of credit and debts from the accountant are reviewed by the auditor of the company, that works as employee for the same Wiches Industry.
Once it’s reviewed by the internal existence auditor under the one company, which that prepared financial statement are must need to Verify and check by the certificate public accountant (CPA).
Here this CPA is the what known as external auditor in the Wiches business. Because any of the person who works as independently auditors with government authorization is what called as external auditor.
Other than any individual who works inside or under the some employment are not considered as a external auditor. Let’s dive into know how this external auditor involved or engaged in the public market.
Info 2: how external auditor works
External auditor doesn’t represent any of the specific things or object, instead they are person who works independent auditors for any public companies.
They won’t works under the any department to perform the audit and not to do audit only for specific private or public company, they are separated auditor who do the professional accounting and audits for whole company as third party.
However they are licensed person or firm which Particularly perform and check the accounting with audit as a outsider of the business.
According to security and exchange commission rules and regulations each and every public company need to prepare and file their business Financial statement using the external auditor.
Even certain organization had a own certified auditor for their company as a employee, such firm must need to perform the audit works using the outside licensed professional external auditor of chatted accountant or certified public accountant.
Moreover this external auditing demands for each public company because of one reason to maintain the stable and honest reports to their all public Investors and shareholders of the company.
On the other hand, any of the Individual who looking to do the accounting externally must need to hold the certified licensed, then security and exchange commission (SEC) must need to authorize person to do the auditing works for any kind of public Industries which are trading among the stock Investor.
Supposed if the submitted reports of financial statement wouldn’t be audit by the any outside certificate public accountant, then such all the submitted statement are not taken into the accepted category of securities statement by the SEC.
Clearly this not only applies to specific types of individual public companies alone it’s applies to all the market participates institution who are involved in the stock market such as Investment bank, stock broker extra….
Info 3: External auditor vs certified public accountant
The external auditor are certified and licensed individual who had authority to perform the audit and accounting works for any kind of such company.
On the other side, certified public accountant are could be a external auditor and internal auditor based on how they are gonna works.
If they takes their job under the any of the business as employee they couldn’t works as external auditor or if they takes their career as professional auditor with license he would works as external auditor.
To make more clear about the external auditor, let’s seen into one brief example below.
Info 4: example of external auditor
Say the company H had three auditor to track and perform their accounting jobs, each of the license auditor works under them do the Separated activities to file the financial statement.
But also when submitting such statement to the security and exchange commission, they would perform the final Audit with third party outside professional auditor.
Here the third party Auditor is what known to be a external auditor but all the auditor are licensed certified public accountant.