Why Must Companies Conduct External Audits?
Most business experts agree that the true value of processing an audit is worth more than you might think.

Why Must Companies Conduct External Audits?

August 2022

Every entity (company), whether large or private, needs to and must prepare credible and reliable financial reports. Most business experts agree that the true value of processing an audit is worth more than you might think. An audit is a responsibility on the part of management to the users or stakeholders, so they can make further investment decisions based on the financial statements.

“The financial statements contain records on the entity’s transactions and are made to establish the entity’s performance and financial condition”, says Ibu Andina Novitariany, Audit & Assurance of ACHSIN Handoko Tomo.

Financial statements must go through an examination process so that their presentation is in accordance with the principles, standards, and rules that apply in Indonesia. This requires an external auditor from a public accountancy to act as an independent third party, and provide an opinion that the entity's financial statements have been presented fairly in all material respects, under the applicable financial reporting framework. This then increases the confidence of those using the financial statements.

Moores Rowland Indonesia can help you determine what aspects of an external audit are most important and for what reasons; why your company should appoint an external auditor, and what are your top factors in choosing an external auditor:


  • Regulatory Standards in Indonesia

External auditors can help identify areas where your bookkeeping or accounting practices are no longer in compliance with the latest government regulations as they investigate financial reports by following Indonesian government principles, standards, independence, and regulations.

  • Quality Control and Independence

External auditors double-check the work of internal auditors. They try to ensure that the internal audit was accurate, comprehensive, and reflective of the financial status of the company and its tax compliance. External audits offer an unbiased point of view into an accounting practice. External audits provide common ground for stakeholders to properly assess the financial health of a company.

  • Critique of Internal Processes

Internal auditors cannot effectively critique the internal processes of a company because they are part of it. However, external auditors observe a business’ operations and determine which areas of it are wasting time and money. External auditors can also provide criticism, both in general and on specific accounting practices. Often they contribute to breakthrough strategies for better and greater efficiency.

In essence, external auditors provide important and valuable insights into the information within a company/organization. The audit process and its findings can determine if the company’s business activities are being carried out well, or not.

As a member of Praxity, the world's largest independent accounting firm alliance, Moores Rowland Indonesia can provide a wide range of technical skills, advice, and appropriate assistance at national and international standards. We guarantee the quality of our audits meets the standards of Praxity, as our parent organization, and are compliant with government regulations as well.

We have two representative offices In Jakarta and Bali. For more detailed information please contact us via email at: contact-jakarta@moores-rowland.com or contact-bali@moores-rowland.com.  

**By: Stefani W. Anggraeni — Marketing Communications & Social Media Specialist