Public companies have to present financial results to their shareholders. These numbers get reviewed by a theoretically neutral third party. The process of reviewing the finances is known as an audit and the person doing the audit is known as (no prize for getting this one)...the auditor.
Typically an auditor isn't a single person (that would be one overworked schlub). Instead, it's usually an accounting firm hired by the company.
As we noted before, these auditing firms are supposed to be neutral observers. Kind of like a referee in a sport. But the auditors get hired by the company being audited, receive a check from the company being audited and want to stay employed by the company being audited. Conflict of interest issues sometimes come to the surface.
For the most part, though, auditors provide shareholders with improved security. An auditor's stamp of approval lets investors know that the company's publicly released results accurately describes what's going on at the company.
Related or Semi-related Video
Finance: What is AICPA?6 Views
Finance a la shmoop what is the AICPA alright people when you think wild and [People dancing in a club]
crazy parties rock stars jumping into swimming pools from the seventh floor [Man jumps off rooftop into swimming pool]
teenagers in skimpy swimsuits running down the halls of hotels you don't think
of the AICPA why because it stands for the American Institute of Certified
Public Accountants and their parties are just different [Group of people sipping cocktails]
yeah the AICPA is responsible for setting US accounting standards it
sets ethical standards so there isn't a CPA somewhere writing off weekly [Roosters preparing to fight]
trips to a cockfighting arena as, you know travel expense it sets all kinds of
professional standards as well like common tax practices, financial statement
auditing practices and quality control for accounting firms so that no matter
which accounting office you visit the coffee in the lobby can't be cold [Man drinking coffee]
come on AICPA you can do better than that all right well the AICPA also puts
together and grades the exam you have to take if you want to become one of those [Boy studying for exam]
accountant people the uniform CPA exam ...Fail to pass that
baby and you may only be able to get a job counting actual beans not the [Man counting beans on conveyor belt]
financial ones so yeah the AICPA is the wizard behind
the curtain of the world of CPA-ing certified public accounting yeah they're
they're just concerned with a different kind of green like AC/DC green [Man singing AC/DC into microphone]
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