Independent Auditor Relationships: Management, Board of Directors and Audit Committee, Internal Auditors, and Shareholders

In a financial statement audit, the auditor maintains professional relationships with four important groups;

1. management,
2. the board of directors and audit committee,
3. internal auditors and
4. stockholders.

These are explained below;

Management

In an auditing context, management refers to the company officers, controller, and key supervisory personnel. During the course of the audit, there is extensive interaction between the auditor and management.

To obtain the audit evidence, the auditor often requires confidential data about the entity. It is, therefore, imperative to have a relationship based on mutual trust and respect.

Board of Directors and Audit Committee

The board of directors of a corporation is responsible for seeing that the corporation is operated in the best interest of the stockholders. The auditor’s relationship with the directors depends largely on the composition of the board.

When the board consists primarily of company officers, the auditor’s relationship with the board and management is essentially one and the same.

However, when the board has a number of outside members, a different relationship is possible. The board can help the auditor in providing necessary information relating to the operation of the entity?”

Internal Auditors

An internal auditor is an employee of a company charged with providing independent and objective evaluations of the company’s financial and operational business activities, including its corporate governance.

Internal auditors also provide evaluations of operational efficiencies and will usually report to the highest levels of management on how to improve the overall structure and practices of the company.

So, the independent auditor has to keep a relationship with the internal auditor to the information relating to the company’s financial and operational business activities

Shareholders

Shareholders are the owners of the company. The auditor is supposed to work in the be an interest of the shareholders. So, there should be a good relationship between the