It is in line with this philosophy that a system of audit has been developed comprising of auditors working directly with the businesses to monitor the ways in which a business entity is doing its business .The business community play a very important part in the growth of the economy of the country. Any adverse effect on a business not only affects the promoters but also their employees, suppliers, customers, and other players in the business cycle. In short, it has a contagion effect on the economy and the severity of which depends, among other factors, on the size of the company and the business segment it is operating in.
An auditor has responsibility towards the shareholders of the auditee unit.The power of appointment and dismissal of the auditor lies with the auditee unit's management and this sometimes also leads to undue influence of the management on the working of the auditor. An auditor is supposed to be a watchdog on behalf of the shareholders and other stakeholders and as such, the integrity of the auditor is very sacrosanct and should not be influenced in any way which is detrimental to the shareholders' interest. An auditor's responsibility is not limited to the shareholders only because an audit report is a public document and is relied upon by various stakeholders in the economy like financial institutions, government bodies and the general public. Hence, it can be said that the auditors play an important role in ensuring good health of the economy of the country as well.
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