Abstract

The role of external auditors is pivotal in strengthening corporate governance within multinational firms, where complex operations, diverse regulatory environments, and various cultural nuances pose significant challenges. Corporate governance, which encompasses principles such as transparency, accountability, fairness, and responsibility, is essential for maintaining investor confidence and ensuring long-term organizational sustainability. External auditors, by providing independent assessments of financial health and compliance, contribute significantly to this governance framework. Their primary function includes evaluating the accuracy and reliability of financial statements, detecting fraud or mismanagement, and ensuring compliance with applicable local and international regulations. In multinational firms, the external audit process is further complicated by differences in accounting standards, legal requirements, and business practices across various jurisdictions. This complexity increases the potential for governance breakdowns and financial irregularities. However, external auditors serve as a safeguard by ensuring that these firms adhere to global standards, thus fostering transparency and accountability. By examining audit practices, this review explores how external auditors facilitate the strengthening of governance structures, focusing on their role in detecting and preventing financial fraud, ensuring compliance, and promoting ethical behavior.
Despite their crucial role, external auditors face various challenges, including overcoming regulatory complexities and maintaining independence and objectivity in diverse environments. This review highlights best practices for external auditors, such as collaborating with internal audit functions, leveraging technology like data analytics, and maintaining an ethical audit culture. It concludes by considering the evolving role of external auditors in response to changing regulations and corporate governance expectations, emphasizing the need for continual adaptation in audit practices. Through this exploration, the review underscores the importance of external auditors in enhancing corporate governance and ensuring the long-term success and sustainability of multinational firms.