Ensuring Good Corporate Governance Through Auditors Appraisal Of The Ethiopian Legal Regime Governing Their Roles And Responsibilities

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Business organizations of the company form are the preferred mode of running business in modernrnsociety and they are considered one of the ingenious creations. The limited liability attribute ofrnsuch organizations and the opportunity they provide for the public to pool resources together arernthe main traits that make them appealing. Inasmuch as companies offer the privilege of limitedrnliability to their members and enable individuals to pool their resources, they also pose threat torncreditors and members are usually forced to entrust management of their resources in the hands ofrnfew individuals. The special threats of companies and their significance in the economy compelrnputting in place legal framework that promotes good corporate governance.rnThe problems of separation of ownership and control and threats to creditors are rectified by arncheck and balance mechanism of audit. Auditors are regarded as watchdogs of a company and theyrnprovide checks on the affairs of management, safeguarding shareholders and other stakeholdersrnboth from fraud and genuine mistakes. The conduct of audit enhances reliability of financialrnstatements and can bring problems within the company to the attention of concerned bodies beforerncrisis occurs.rnHowever, for auditors to discharge their duties as watchdogs of the company there needs to be arnlegal regime that effectively governs their roles and responsibilities. In the absence of effective lawsrnthat enhance the role of auditors in ensuring good corporate governance, they can be put in arndifficult place where they can not discharge their responsibilities but rather further the interest ofrnmanagers or their own personal interest. History has witnessed the collapse of companies aroundrnthe world and in the wake, there have been various legal reforms focusing on how to best enablernauditors discharge their duties and foster the good corporate governance of the companies.rnHow to best ensure good corporate governance through auditors in various laws and corporaterngovernance codes are dealt through mechanisms of ensuring their objectivity and effectivenessrnsince checking the work of management is based on independence from management. The exclusionrnof individuals affiliated to members of a company from involving in audit of the company,rnprohibition of auditors from rendering certain types of services to their audit client, rules onrnappointment procedures and the forming of independent audit committees are measures taken inrndifferent countries in order to ensure good corporate governance through auditors.rnThis work studies how to ensure good corporate governance of companies through externalrnauditors and assesses the existing Ethiopian legal regime governing their roles and responsibilitiesrnto this end. It examines whether the legal frameworks foster the external auditors’ role inrnpromoting good corporate governance of Ethiopian companies. The study was conducted based onrnlegislative and comparative analysis. The findings of the study show that there are different possiblernways to enhance the role of auditors in ensuring good corporate governance. It also shows that therncurrent legal regime governing companies acknowledges external auditors have a very significantrnrole in bringing about the good corporate governance of companies and there also exist somernongoing reforms. Finally, this work provides some recommendations which the writer considersrnappropriate.

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Ensuring Good Corporate Governance Through Auditors Appraisal Of The Ethiopian Legal Regime Governing Their Roles And Responsibilities

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