External auditing

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External Auditing is an assurance service, the need for which arose with the concept of stewardship i.e. management and the owners are two different entities.It has a very brief history not more than a couple of centuries.The speciality can well be explained in the context of modern business structure. In the world of today the market is substantially occupied by giant corporate entities where the management is not the actual owner of the entity.Owners of the corporate entities,called shareholders,have neglible role in the day to day running of these entitie.They rely on the reports generated by management at specified intervals of time.To brige the gap created by lack of trust between the owners and management,an external auditor,appointed by the shareholders as their agent,review the performance of management and assures the shareholders(owners) about the credibility of their self-generated reports.