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The Governance Of External Auditors

Decent Essays

Governance of external auditors
Role of auditor
In an effort to transform MSEL into a listed company, we should be able to ensure that the shareholders’ interests are protected. In the past, 85% of shares were owned by the directors, and they were highly motivated to work for the profitability of MSEL as the share was directly correlated with their remuneration. However, after joining the London Stock Exchange, the directors’ proportion of shares will inevitably decrease as a result of issuing new shares.
It is not uncommon that human are self-interest, as the agents (managers) of MSEL, shareholders will be afraid that the information provided by us tends to be inadequate, making them suffer unnecessary risks. To deal with this problem, auditors have been introduced. By making contracts with the business, auditors act as the “supervisory body” and provide detailed report to the shareholders. In a way, auditors prevent the business from manipulating and cheating the shareholders, and then protect the public interest.
Issue of contract with Adams & Co
Although we know that Adams & Co, our auditor, has given a ‘clean audit opinion’, there still remains some serious problems with reference to the corporate governance aspect. The senior partner of auditors, Bill, was at the same university with Jack Bradford, our business establisher. The public may worry that governance of MSEL will be insufficient, because Adams & Co can be in a position to shield MSEL for own interest.
To

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