Impact of Global Financial Crisis
The global economic meltdown occurs in 2008. It is one of the greatest economic crises in the world has seen till far? The economic crisis has drastically impacted the state. Concerning various financial and economic problems at the national and international levels. Therefore, auditors and stakeholders play a vital role in the global financial crisis. At the national and international levels both.
Individuals, societies, and governments must practice systematic, proactive. And integrated risk management. Must prepare for the negative consequences of financial shocks. Proactive risk management mainstreamed into development agendas. And must be established contingency planning mechanisms. And to avoid unintended economic consequences.
What do you know about the Global Financial Crisis?
In some ways, the financial crisis reflects an imbalance in the expansion of the economy. And monetary sectors. For example, the easy availability of housing loans. This resulted in historical debt levels in the United States and Europe. Which is now three times the GDP. In addition repayment defaults resulting from the bubble, crash increased illiquidity, leading to bankruptcies. And financial institution closures.
A financial crisis occurs. When the value of debt assets and assets falls dramatically. As a result, businesses struggle to satisfy their financial obligations. And financial institutions lack cash. Or convertible assets necessary to fund operations and meet immediate demands.
Role of Auditors in the Financial Economy Crisis
Auditors play an essential role in the economic markets at the international level. Because they promote secret economic information and provided by various financial and economic institutions. Such as banks and other managed mental institutions. The process of auditing is generally supporting the framework of the financial process during the crisis. The role of auditors is to provide the updated version. And information is taken from the higher authorities to the financial institutions. At the same time, other institutes such as banks and other regulators. Use additional information and give it to different stakeholders.
According to FRC in 2010
According to the financial reporting council, FRC in 2010 declared the purpose of audit that alters and improves the provided independent updated information to the stakeholders. This information which collected by the directorial institutions regarding finance and the economy. They also offer an opinion regarding any international or national business entity in the market. Auditors also contained a large amount of information regarding audits and non-auditing fees. They are also responsible for questioning the orders of the company. They received from other international business companies.
Auditors played an essential role in the global financial crisis in 2008. At that time, auditors criticize the critics. And the people from international companies. As a result, auditors established a strategic plan. And internal and external control protocols to examine the report’s records. Such as international documents, operating practices, files, and financial data. Auditors are also responsible for the filing of the documents. Also testing of the audits and their findings.
Role of Stakeholders in the Crisis
The stakeholder theory well explains. The role of stakeholders in the global financial crisis according to this theory. Stakeholders indicate the process of capitalization connects their relationship with the international business entities. And their customer’s employers. The investors optimize the business at the international level. According to this theory, international entities made a stage and firm for the stakeholders. But not for the national and international levels.
Stakeholders have a significant impact on social communication between different international entities. This conceptual consideration allows stakeholders to relate with the customers. And suppliers to have a better understanding and quality insurance. Furthermore, sharing the data from auditors to the stakeholders helps the local community. And the international market optimizes the industry.