Why your Organization Needs an External Auditor

External auditors are independent persons or registered bodies, who inspect companies’ financial and accounting records to express an opinion as to whether the financial statements give a true and fair view of the organisation’s financial position and performance and are free from material misstatement. Getting your financial statements audited by external auditors is important to establish credibility and ensure compliance with relevant laws and regulations.

While you may be satisfied with the quality of your staff and on internal auditors’ reports, it would still be difficult for you to judge their independence and impartiality without engaging a third party as an external auditor. A good quality external audit may save your organisation from contingencies or catastrophic problems like fraud, litigation, non-compliance etc.  External audit is not just an obligation or statutory compliance; it is a powerful tool for viewing the current state of an organisation, providing a vision for future aspirations.

Below are some of the few reasons as to why your company needs external auditors:

1. External auditors can help in identifying specific areas where the books of accounts are not in compliance with government regulations, for instance, laws promulgated by ACRA or tax authorities.
2. Your financial statements get more credibility if they are vetted by an external auditor in a manner that the financial statements achieve fair presentation.
3. External audits provide some common ground for all the stakeholders of the organisation to assess its financial health and ability to continue as a going concern.
4. While examining books of accounts, external auditors can provide reasonable assurance about whether your financial statements are free from material misstatement, which can arise from fraud or error. This helps the management to establish proper measures for prevention and detection of fraud in the long run.
5. External auditors can find areas where the organisation could establish or improve the appropriate use of accounting policies and the reasonableness of accounting estimates. This helps the management to make proper disclosures in the long run.
6. External auditors can also look at the same factors as the internal auditor and obtain an understanding of the internal controls to establish or improve controls or where processes can be automated to make them more streamlined.

In Singapore, only a public accounting firm registered with ACRA may act as an external auditor and is responsible for the audit opinion and this responsibility includes ensuring that the audit is conducted in accordance with the Singapore Standards on Auditing (SSAs) and other requirements.

Tan, Chan & Partners is a well-reputed firm of Chartered Accountants from Singapore. We have been in practice since 1982 and provide specialised audit services including statutory audits, lucky draw audits, MCST audit, IPCs audit, Society/Association audit, special purpose audits and so on. Our commitment to providing the best quality assurance services is the reason for what we do. We deliver comprehensive audit and assurance services that are designed to give real value to your company and reinforce investors’ confidence in it.