Explain the reasons due to which Multi-National Companies (MNCs) have to be concerned about the auditing issues.
Explanation of Solution
MNCs are required to make available the reliable and quality financial information to its users to sustain the global competition. Since, auditing helps in increasing the quality and reliability of the financial statements; therefore, MNCs are concerned about auditing issues.
Major accounting scandals took place in the world which resulted in decreasing the investors’ confidence. As a result, Sarbanes Oxley Act was introduced. Sarbanes-Oxley Act includes various provisions regarding corporate governance and auditing issues that are formed to restore investors’ confidence in organizations.
Thus, MNCs are concerned about the auditing issues that would help in restoration of investors’ confidence.
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