Independent Auditor

DEFINITION of 'Independent Auditor'

A certified public accountant who examines the financial records and business transactions of a company that he/she is not affiliated with. An independent auditor is typically used to avoid conflicts of interest and to ensure the integrity of the auditing process. When an audit is performed, it is the financial auditor's job to make sure that records are examined in an honest and forthright manner. Independent auditors are sometimes called external auditors.

BREAKING DOWN 'Independent Auditor'

Independent auditors are often used - or even mandated - to protect shareholders and potential investors from the occasional fraudulent or unrepresentative financial claims made by public companies. The role of the independent auditor became especially relevant following the implosion of the dotcom bubble and the passage of the Sarbanes-Oxley Act (SOX) in 2002. The SOX enacted strict reforms, including the appointment of independent auditors, to improve the accounting and auditing procedures of public companies.

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