Why do they even matter?
Wind turbines in India. http://cleanaircanada.blogspot.com/2009/04/india-to-build-wind-turbines-in-ontario.html.
Why are audits crucial to a company’s survival? Many companies may argue that they are a waste of time and money, and do not provide any real or tangible benefits. Their skepticism stems from the common fear of being audited and having unintentional or intentional mistakes found. Also, audits do not provide tangible benefits for a company, and many times do not provide immediate benefits. However, the long-term effects of an audit will make a company stronger and more likely to be trusted by outside parties. The objective of hiring auditors is to create trust and transparency between the company and investors and stakeholders. In the article titled “Wind turbine makers rope in E&Y to bring about ‘perception change’”, M. Ramesh observes Indian Wind Turbine Manufacturer’s Association’s steps to validate their credibility by bringing in Ernst & Young, an international auditing and consulting firm. There are many misconceptions about the wind industry in India, therefore one company brought in an accounting firm to make an unbiased opinion to the public on the facts of the matter. An auditors job is to make sure the public knows the truth about an organization and state the facts. For this wind turbine company, auditors were hired in order to validate the financial benefits that this industry can bring to India. Ramesh claims, “The E&Y report will seek to change this perception by presenting the facts.” (Ramesh, 2012) The author’s point is that companies bring in public accountants to audit them and validate the company’s credulity. Audits tell the public the truth about the company by doing exactly what is declared above: stating the facts.
In another article titled “Why didn’t the auditor dog bark in 2008?”, David Brown claims, “The audit is intended to enhance confidence in an entity’s financial statements by having an external auditor, who is independent of management, express an opinion on those statements. It reflects the distinct roles and responsibilities of three parties: management; the auditor; and the board of directors, elected by the shareholders; and acts as a sturdy lynchpin for transparency between these parties and in the financial system as a whole.” (Brown, 2012) In other words, the audit is what ensures the stakeholders that their money and investments are safe and secure, and that they can trust the company that they invest in. Audits keep the financial system from failing because they make certain that businesses and companies are not lying about their numbers.