Why does public companies use independent auditors?

Public companies engage independent or external auditors because external auditors lend credibility to the audited financial reports. Public companies must comply with audited financial statements for a given year or period to be submitted to different regulatory agencies. Once the audit is done the external/independent auditor will issue an opinion about the financial statements of the public company whether it was fairly reported or not according to the accounting standards. The auditor can also make a disclaimer when there is no opinion will be issued because of limited scope of examination or supporting documents that would not enable them to form an opinion. The external auditor must be independent in fact and in appearance. This lends credibility to the financial reports and gives a high level of assurance to the end users i.e. investors, government agencies.

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