The nature and functions of auditing are that it determines and requires accountability. That accountability is in regards to the financial statements that are presented to the public, the creditors, the stockholders, the employees, and investors of a company. The need for auditing was described by U. S. Supreme Court Chief Justice Warren Burger in a 1984 Supreme Court decision. This statement is presented in the very beginning of our text and as such indicates the importance of auditing. "By certifying the public reports that collectively depict a corporation's financial status, the independent auditor assumes a public responsibility transcending any employment relationship with the client. The independent public accountant performing this special function owes ultimate allegiance to the corporation's creditors and stockholders, as well as to the investing public. This "public watchdog" function demands . . . complete fidelity to the public trust." (pg 3) The audit function determines the accuracy of a company's records. It is further used to "interpret FASB and other authoritative pronouncements to ensure that financial statements are fairly presented" and "make judgments about the fairness of very complex accounting processes such as inventory valuation or a pension liability estimate, and do all this in a totally objective, unbiased, and professionally skeptical manner. (pg 3)
At Pepperidge Farm all external auditors are hired by Campbell's Soup Company primarily from Price Waterhouse Coopers. The independent auditors are sent out to each plant and are used to validate integrity. Pepperidge Farm is a Tier 1 company and must comply with Sarbanes-Oxley Act 404. Below is an excerpt from section 404:
(a) Rules Required. The Commission shall pre ...