In a free and fair market. A 'rosy' audit could hide fraud, and may result in BK for the business. 2008 should have let banks fail by the boatloads, but the US govt (mostly run by rich guys) stepped in to save the banking industry (mostly run by their rich neighbors.) If one could guarantee that the CEO, CFO, COO, and all members of the BOD felt some present and future financial burden for producing rosy/fraudulent audit reports, then external audits might be more truthful or even unnecessary.