ABSTRACT
Auditors have an important role in corporate governance, but they are not part of a firm’s management, which consists of the board and the chief executive officer or the general manager. They are not, legally speaking, ‘agents’ for the members of the firm either, although they are often elected by members. On the other hand, auditors are not agents for the management either, despite their fees being based on a contract between themselves and the management – acting on behalf of the firm – whose work they scrutinize. In the case of firms with societal importance in particular, they are seen as guardians of public interests, albeit not directly, by communities of people and institutions relying on auditors’ work (including the state in its many roles). They are also seen as guardians of public interests in a more abstract way, given that auditing contributes to the reliability and orderly functioning of markets and society generally by enhancing the integrity and efficiency of corporate information. In this way, auditors fulfil a particularly important societal role. This role can be also seen as one that ensures accountability to a firm’s non-member constituencies …
Mähönen, Jukka T, Auditors’ role in corporate governance (September 19, 2022), University of Oslo Faculty of Law Research Paper No 2022-47; Preprint of chapter in Hanne Birkmose, Mette Neville and Karsten Engsig Sørensen (eds), Instruments of EU Corporate Governance: Effecting Changes in the Management of Companies in a Changing World (Kluwer Law International, forthcoming 2023); Nordic and European Company Law Working Paper No 22-05.
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