Corporate Governance in Jordan: Role of the External Auditor

Citation: Bashar H. Malkawi (2018) Corporate Governance in Jordan: Role of the External Auditor. CORPORATE GOVERNANCE IN ARAB COUNTRIES: SPECIFICS AND OUTLOOKS (RSS)
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Summary

In our globalized world, competition for capital is intense and only jurisdictions with superior corporate governance will attract the FDI crucial for economic growth and development. Corporate governance encompasses numerous aspects of how a business is governed and the relationship between the company and various stakeholders. An important marker of good corporate governance is transparent and reliable financial reporting since investment decisions are based on financial statements which must be reliable and trustworthy.

An external auditor, through his professional opinion, plays a significant role in validating financial statements.

The goal of this chapter is to assess the legal regime of external auditors – as opposed to internal auditors - per Company Legislation of 1997 and provide suggestions for improvement in the current legal regime. Part II discusses global trends in corporate governance with respect to the role of the external auditor. Part III of the chapter provides an overview of the development of the auditing profession in Jordan. In Part IV, the chapter analyzes in detail the specific provisions related to auditors in the Company Legislation of 1997. The part also points out various shortcomings and inconsistencies between rights and duties of auditors and makes suggested proposals for amending the current law.