The Role of Auditors in Corporate Governance

Corporate governance is the framework of policies and procedures an organization will use to manage their operations. Auditors play a role in governance because these individuals have a responsibility to report inappropriate behavior to internal and external business stakeholders.

Defined

Many companies use corporate governance to create a self-regulating environment to control their operations. This ensures that a single individual or department does not create undue strain in the company. To prove that governance completes this requirement, auditors review the governance and its actions in daily operations.

Features

Auditors often focus on the transparency and accountability of a company during their review. Owners, directors and executives must prove they uphold the company's mission and values in their actions, thereby rewarding shareholders with financial returns.

Warning

While auditors can give an independent review of corporate governance, it is possible that auditors fail to uphold their responsibility. This occurs when auditors offer accounting services beyond the audit process, which can create a conflict of interest and result in auditors becoming too close to the company's operations.

References

• BusinessDictionary.com: Corporate Governance
• Wbiconpro.com: The Role of Auditors in the Context of Corporate Governance