Having both internal and independent auditors are very
crucial to companies and their financial success. It is very important if you are
a publicly owned company. The Securities and Exchange Commission (SEC) requires
all public corporations to file financial statements and make them available to
the public. The 10-K reports contain audited financial statements submitted
annually to the SEC for the distribution to the public. The 10-Q reports
contain unaudited financial statements submitted quarterly, also for public
distribution. Companies hire independent auditors for their financial
statements and their internal control of independent internal verification.
Companies have to make sure their financial statements are reported correctly
because it can drastically affect their value to investors and their reputation
throughout the world. External auditors have to assess a company’s financial
statements and publicly agree that the financial information is correct and
reliable. External auditors help prevent companies into going to litigation or
having internal company problems. It also causes employees for work on the
financial information to be more diligent because they will be held accountable
for potential mistakes that were seen by external auditors.
has an internal committee that works with the company independent auditors.
After the independent auditors have reviewed the financial statements, they
meet with the committee with and without management to discuss the results,
their evaluations of the company internal controls and overall financial
reporting (Proxy, 18). Textron chose Ernst & Young, LLP to be the company’s
independent auditor for 2017. They were reappointed from last year and won the
reappointment through many various factors such as past performances and
professional qualifications (Proxy, 18). Textron has many guidelines and
by-laws to make sure that any independent auditor remains independent. Even
though there aren’t any independence issues occurring with Textron, an example
of an independence issue would be someone who is at Ernst & Young that has
a major financial interest in Textron. Another example would be someone at
Ernst & Young is related in some capacity to someone who is on the Board or
a Leadership Committee of Textron.