Skip to main content    

Company Filings | More Search Options

U.S. Securities and Exchange Commission

Show — Main navigationHide — Main navigation                -  About                    -  What We Do 
                  -  Commissioners 
                  -  Securities Laws 
                  -  SEC Docket 
                  -  Reports and Publications 
                  -  Careers 
                  -  Contact 
                -  Divisions                    -  Corporation Finance 
                  -  Enforcement 
                  -  Investment Management 
                  -  Economic and Risk Analysis 
                  -  Trading and Markets 
                  -  National Exam Program 
                  -  All Divisions and Offices 
                -  Enforcement                    -  Litigation Releases 
                  -  Administrative Proceedings 
                  -  Opinions and Adjudicatory Orders 
                  -  Accounting and Auditing 
                  -  Trading Suspensions 
                  -  How Investigations Work 
                  -  Administrative Law Judges 
                -  Regulation                    -  Rulemaking Index 
                  -  Proposed Rules 
                  -  Final Rules 
                  -  Interim Final Temporary Rules 
                  -  Other Orders and Notices 
                  -  Self-Regulatory Organizations 
                  -  Staff Interpretations 
                -  Education                    -  Investor.gov 
                  -  Check Out a Broker or Adviser 
                  -  Investor Alerts and Bulletins 
                  -  Fast Answers 
                  -  File a Tip or Complaint 
                  -  Publications 
                -  Filings                    -  EDGAR Search Tools 
                  -  Company Filing Search 
                  -  How to Search EDGAR 
                  -  Requesting Public Documents 
                  -  Forms List 
                  -  Information for Filers 
                  -  About EDGAR 
                -  News                    -  Press Releases 
                  -  Public Statements 
                  -  Speeches 
                  -  Testimony 
                  -  Spotlight Topics 
                  -  What's New 
                  -  Upcoming Events 
                  -  Webcasts 
                  -  SEC Videos 
                  -  Media Gallery 

## User account menu

-  Log in 

-  U.S. Securities and Exchange Commission    -  Divisions 
  -  Enforcement 
  -  Regulation 
  -  Education 
  -  Filings 
  -  Newsroom 
-  Newsroom    -  Press Releases 
  -  Public Statements 
  -  Speehes 
  -  Testimony 
-  RSS Feeds    -  Press Releases 
  -  Public Statements 
  -  Speeches 
  -  Testimony 
-  Social Media    -  @SEC_News 
  -  SEC Channel 
  -  SEC Photostream 

-  Investor Information 
-  Investor Alerts and Bulletins 
-  Fast Answers 
-  Investor Reports/Publications 
-  Tools and Calculators 
-  Education Resources 
-  Información en Español 
-  Contact 

Company Filings | More Search Options

#              Investor Publications                             

# All About Auditors: What Investors Need to Know

                            June 24, 2002                       

When companies register their securities with the U.S. Securities and Exchange Commission and file annual and other reports, they must disclose important financial information. In many cases, this information must be audited. This publication describes the role of the auditor in reviewing a company's financial books and records.

## What Is an Auditor?

An auditor is an independent certified public accountant who examines the financial statements that a company's management has prepared. The federal securities laws require publicly held companies that file reports with the SEC to submit financial statements that are accurate, truthful, and complete and prepared according to a set of accounting standards called "Generally Accepted Accounting Principles" (or "GAAP"). Many of these financial statements - including those in the company's annual report and those provided to shareholders in connection with the solicitation of proxies for annual meetings - must be examined and reported on by an independent auditor.

## What Do Independent Auditors Do?

A company's outside, independent auditor examines the company's financial statements and provides a written report that contains an opinion as to whether the financial statements are fairly stated and comply in all material respects with GAAP. In addition, some companies also use internal auditors to review the financial reporting processes and internal accounting controls to assure that the company's systems are appropriately designed and operating effectively.

## Who Prepares a Company's Financial Statements?

A company's management has the responsibility for preparing the company's financial statements and related disclosures. The company's outside, independent auditor then subjects the financial statements and disclosures to an audit. During the audit, the outside auditor obtains an understanding of the company's internal controls and then applies "auditing procedures," which may include inspection of the company's books and records, observation, inquiries, and confirmations. The procedures the outside auditor uses must be sufficient to allow the auditor to obtain enough competent evidence to express an opinion on the fairness of the financial statements and whether they conform to GAAP in all material respects. If the auditor cannot reach that conclusion, then the auditor must either require the company to change the financial statements or decline to issue a standard audit report.

## What's the Purpose of an Audit?

An audit provides the public with additional assurance — beyond managements' own assertions — that a company's financial statements can be relied upon. As the U.S. Supreme Court stated in the landmark case of *U.S. v. Arthur Young*: "The SEC requires the filing of audited financial statements in order to obviate the fear of loss from reliance on inaccurate information, thereby encouraging public investment in the Nation's industries." That has important implications for investors making investment decisions, for banks and financial institutions that may extend credit or make loans to the company, and for other businesses and members of the public who deal with the company.

## How Can I Find Out Who Audits a Particular Company?

The best way to identify the auditor of a publicly traded company is to check the company's most recent filings using our EDGAR database of corporate filings. You'll find the identity of the company's auditor in its annual report on Form 10-K. Look for the "Accountant's Report" under Item 8 of the Form 10-K. Whenever a company hires a new auditor to certify its financial statements, it must announce that news on Form 8-K (under Item 4) within 5 business days. Be sure to check any Form 8-K filings submitted after the company's most recent annual report to find out whether the company subsequently hired a new auditor.

A variety of commercial resources exist that list publicly traded companies and their auditors. Some resources also list major auditing firms and the publicly traded companies they audit. You should be able to find these resources at your local public library or the nearest law or business school library. You can also find much of the information contained in these resource materials on the Internet.

## What Else Should I Know?

In addition to serving as auditors, some accounting firms offer non-audit consulting services to their audit clients. You can check a company's annual proxy statement for information concerning the company's relationship to its independent auditor and the extent of other services the auditor might be performing for the company. For example, the company's proxy statement should disclose the fees for audit, information technology consulting, and all other services provided by the company's auditors during the last fiscal year.

For more information about investing wisely, please visit the Investor Information section of our website.

 

 

STAY CONNECTED1Twitter2Facebook3RSS4YouTube5Flickr6LinkedIn7Pinterest8Email Updates

## Footer menu

-  Site Map 
-  Accessibility 
-  Contracts 
-  Privacy 
-  Inspector General 
-  Agency Financial Report 
-  Budget & Performance 
-  Careers 
-  Contact 
-  FOIA 
-  No FEAR Act & EEO Data 
-  Whistleblower Protection 
-  Votes 
-  Open Government 
-  Plain Writing 
-  Links 
-  Investor.gov 
-  USA.gov