The Role of the Auditor in American Business
Tim Salvesen is a vice president of GridLiance, the first independent power infrastructure developer in the United States. For more than a decade prior, Tim Salvesen accumulated financial and accounting experience as an auditor for KPMG LLP, an international auditing and advisory firm, representing one of the systems put into place by the United States federal government to maintain integrity in corporate America.
Auditors are certified public accountants (CPAs) who review the financial statements of publicly held companies, ensuring that they are accurate and compliant with common standards of the accounting profession. Annual reports filed with U.S. Securities and Exchange Commission, as well as certain documents distributed to shareholders, are subject to this review in order to guarantee their integrity. The work of an auditor benefits banks, investors, and other interested parties by assuring the public that the company’s statements are honest and reliable.
In addition to reviewing documents, much of the auditor’s task is to study the systems and procedures employed by the company, including analyzing variances, observing inventory procedures, and confirming accounts with third parties. This allows the auditor to develop a complete understanding of its operations and form an informed opinion regarding its proper accounting.
Though auditors are hired by companies to provide their reviews, they must remain largely independent. If the auditor cannot resolve any problems with submitted statements, the auditor must either refuse to submit an audit report or instruct the company to correct its statements. An auditor is allowed to offer advice and submit recommendations to improve the company’s internal controls and financial reporting, but is not expected or required to take a direct hand in such matters. It is also not their responsibility to locate documents for inspection, as the company must provide them on request. Ultimately, the statements are entirely the responsibility of the company management.
Auditors are certified public accountants (CPAs) who review the financial statements of publicly held companies, ensuring that they are accurate and compliant with common standards of the accounting profession. Annual reports filed with U.S. Securities and Exchange Commission, as well as certain documents distributed to shareholders, are subject to this review in order to guarantee their integrity. The work of an auditor benefits banks, investors, and other interested parties by assuring the public that the company’s statements are honest and reliable.
In addition to reviewing documents, much of the auditor’s task is to study the systems and procedures employed by the company, including analyzing variances, observing inventory procedures, and confirming accounts with third parties. This allows the auditor to develop a complete understanding of its operations and form an informed opinion regarding its proper accounting.
Though auditors are hired by companies to provide their reviews, they must remain largely independent. If the auditor cannot resolve any problems with submitted statements, the auditor must either refuse to submit an audit report or instruct the company to correct its statements. An auditor is allowed to offer advice and submit recommendations to improve the company’s internal controls and financial reporting, but is not expected or required to take a direct hand in such matters. It is also not their responsibility to locate documents for inspection, as the company must provide them on request. Ultimately, the statements are entirely the responsibility of the company management.
