Final answer:
The auditor's report may also be addressed to the board of directors. Auditors, the board, and outside investors are part of corporate governance, yet failures like with Lehman Brothers show the system's potential weaknesses.
Step-by-step explanation:
The auditor's report may be addressed to the company whose financial statements are being examined or to its board of directors, who are elected by the shareholders to provide oversight and governance. This report is a critical element of corporate governance, with the auditing firms playing a crucial role in reviewing financial records and ensuring the integrity of financial information. Alongside auditing firms, the board of directors and outside investors, such as those managing mutual funds and pension funds, form the backbone of corporate governance systems. Yet, in cases like Lehman Brothers, it became evident that deficiencies in corporate governance could lead to the failure in delivering accurate financial information to investors and stakeholders.