How to find independent auditors?

Indpendent CPA auditors are like referees within the financial reporting arena. The CPA comes in, does an audit from the business's accounting system and methods and gives a report that is concerned company's financial statements. Publicly owned companies are required to have their annual fiscal reports audited by independent CPA firms and any privately owned businesses have audits done also because they know that an audit report will add credibility to their fiscal reports.

An auditor judges whether the business's accounting methods come in accordance with generally accepted accounting principles (GAAP). Generally everything is in place and also the financial report is really a reliable document. But at times an auditor will wave a yellow or red flag. Some indicators of potential trouble include in the event the business's capability to continue normal operations is in doubt because of what is known as financial exigencies, which could mean a low cash balance, unpaid overdue liabilities, or major lawsuits that the business does not come with the cash to cover.

An auditor must exercise professional skepticism, meaning the auditor should challenge the accounting methods and reporting practices of the client in order to make sure that its financial plan conform with accounting standards and are not misleading - in short, that the financial plan are fairly presented. Indeed, the language "fairly presented" are the exact words used in the auditor's report.

A great auditor need technical know-how, but also needs to know how to be tough on the accounting approaches for the client. His job is to be the agent of the shareholders and other users of the business's financial report. It's incumbent on an auditor to strictly uphold GAAP, and not just let any irregularities slide. 

There are a selection of well-known companies that engaged in accounting fraud recently  and that fraud was not discovered by the CPA auditors. Enron is one of these companies. In this case, the auditing firm, Arthur Anderson was found in charge of obstruction of justice since it destroyed audit evidence.