The Value of the Audit to U.S. Capital Markets

Almost everyone depends on capital markets in some way. They benefit us all, powering our economy and the innovative products and services that make everyday life possible.

“The capital markets are foundational to modern economic systems around the globe,” said John Farrell, Audit Chief Strategy and Transformation Officer, KPMG. “They provide investors – whether it’s an individual investor thinking about retirement or a conglomerate looking to invest in products – with a reliable platform for financial trade.”

Consistent, reliable, and comparable financial information is what underpins robust capital markets and allows investors to confidently rely on financial statements to make investment decisions. A key reason U.S. capital markets work is because these statements have been independently assured by an independent public company auditor.

“Audits have a positive effect on companies and their management by serving as the independent guardrails for management,” said Christopher Tower, ESG Strategy and Services Leader, BDO. “Before an opinion is issued, auditors spend countless hours evaluating the design and effectiveness of a company’s internal controls and the accuracy of the financial information reflected in the financial statements.”

“The value they bring is objectivity and expertise,” added Farrell. “They really form a check and balance by evaluating whether companies are following the right procedures and rules needed to  reliably disclose their financial performance and facilitate comparability.” Tower added, “Put another way, auditors help level the playing field by making sure everyone is playing by the same rules.”

This behind-the-scenes scrutiny also bolsters a culture of professionalism, discipline, and accountability within public companies.

To learn more about the value of the audit to the U.S. capital markets, visit the CAQ’s resource, Value of the Audit: A Brief History and the Path Forward.