How does the work of an external auditor protect the stakeholders in a company? Is this protection effective and if not what should replace it The success of many companies is determined by management’s ability to meet or exceed market expectations of consistent earnings growth. Failure to meet these expectations can result in loss of investor confidence and it is essential that in order for an organisation to financially prosper, that it is able to provide assurance to the stakeholders that proper and reliable financial information processes are in place. This is achieved through professionals known as internal and external auditors who are employed by the organisation to perform the auditing activity. The recent bank collapses like Barings and Enron focused on the crucial role played by internal and external auditors in banking regulation. In my essay I will explore the positive impact that external auditors may have on an organisation and whether or not they can protect the shareholders. In the first section of the essay, an explanation of the primary role of an internal and external auditor will be provided. The second section will highlight and consider how utilising the external auditor’s expertise can benefit both the company and protect the shareholder. The third section will discuss the risk elements and the manipulation of financial statements and conflict of interest. The fourth section will be my conclusion. Internal auditing is a system of procedures and activities with the goal of highlighting organizational problems and recommending solutions. The scope of internal auditing within an organization is broad and may involve topics such as the efficiency of operations, the reliability of financial reportin ...