| Pub. Date | : October, 2021 |
|---|---|
| Product Name | : The IUP Journal of Accounting Research and Audit Practices |
| Product Type | : Article |
| Product Code | : IJARAP091021 |
| Author Name | : S Sandhya |
| Availability | : YES |
| Subject/Domain | : Finance |
| Download Format | : PDF Format |
| No. of Pages | : 8 |
In this paper, a review of recent research on the connection of auditing with corporate governance practices is conducted. The role of auditing is to validate the financial statements, the system process and procedure. The assurance of goodness in these would lead to better corporate governance. A good corporate governance framework involves better managed internal processes and best use of investors' money. The study identifies the linkage of auditing with corporate governance and also the contribution of its various components, namely, internal auditing function, external auditors and the audit committees for establishing good corporate governance practices. The studies reviewed found that auditing mechanism can effectively monitor and evaluate internal operations and ensure compliance; there can be fair view of financial statements and efficient risk management, thereby protecting investor's interest. It can be inferred that high quality auditing practices can reduce misappropriations of resources, frauds and scams, reduce risk to all stakeholders, leading to better corporate governance in firms. In the absence of very recent research on this issue, this paper contributes to the existing literature wherein it reiterates the role of different components of auditing in corporate governance.
The primary objective of auditing is to authenticate the accounts and records and report to the owners of the business whether the books of accounts are properly drawn up according to the requirements of law, and whether they exhibit a true and fair view of the profit and the financial position of the company. Corporate governance involves an oversight of a corporation's policies, procedures and practices. It is defined by the conventional accounting and finance literature as "the range of control mechanisms that protect and enhance the interests of shareholders of business enterprises" (Fama and Jensen, 1983). It helps to ensure that the corporate is operated in the best interests of the business and its investors. The onus of corporate governance usually lies with the board of directors. Auditors are employed to monitor and test the internal controls, but the ultimate responsibility of corporate governance lies with board.