A chartered accountant is an external auditor who reviews a company’s accounting practices to ensure they meet minimum requirements and best practices. They work independently and submit reports to the audit committee or board of directors. They may also certify a company’s financial reports.
A chartered accountant is an external auditor appointed by a company to audit its books or other activities as required by law. Typically, this auditor reviews a company’s accounting practices and determines whether they meet minimum requirements. Sometimes the chartered accountant is hired by the board of directors’ accounting committee; other times, he or she may be hired directly by the board of directors. It is rare for the management of a corporation to hire such an auditor.
Typically, the chartered accountant reviews the corporation’s accounting practices each year. This review includes the most important accounting activities, internal controls and reporting procedures. The auditor’s review compares the company’s activities to best practices found in the country in which the company is located. The auditor must then submit a report to the audit committee of the board of directors or directly to the board of directors.
An auditor works closely with company management to gather the necessary information to complete the required work. Each auditor exercises caution in the relationships he develops with the company’s management, because the statutory auditor must always be considered independent. Some audit committees and boards of directors limit any additional work that the statutory auditor can do for the company in order to ensure the auditor’s independence.
Auditors complete all work in accordance with best practice accounting standards and any statutory regulations for certified public accountants. Many chartered accountants are certified public accountants. Requirements for a chartered accountant differ by jurisdiction. Some jurisdictions require the auditor to be licensed in their jurisdiction to practice corporate audits.
When an audit firm begins to work with a particular firm on any external audit engagement, the firm generally does not receive any further work from the same firm. Each company has internal regulations within the company or its board of directors to determine what additional work, if any, a company can contract with the company to perform. Most statutory auditors have extensive experience in external corporate audits in order to specialize in this type of work.
Some companies hire an auditing firm to certify their financial reports. Generally, statutory auditors carry out this certification. The external auditor completes a review of the company’s financial condition and its annual financial statements. The auditor signs the company’s annual statements with the conclusions of the report. This external report is usually included in the company’s annual report to its shareholders.
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