The role of the external auditors is to give a professional opinion on the quality of the financial statements. Specifically the auditors must report whether in their opinion:
The auditors will normally comment on other matters as well, and this is another important source of independent advice for governors. They will not, however, give an opinion on the institution’s financial health unless specifically commissioned to do so, or if it is so uncertain that they feel obliged to comment on its prospects for survival.
The external auditors will usually provide a management letter reporting on issues that have arisen during the annual audit. This should be examined in detail by the audit committee, together with the management response, and reported on to the governing body.
The governing body will appoint external auditors for a specified period and will be expected to ‘market test’ at regular intervals.
More information [PDF, 63KB]