The purpose of the study is to understand the significance of audit as independent watchdog, and their dichotomy with external auditors and. We seek to address the issue, to what extent audit committee as another watchdog is critical in enhancing the accuracy of financial reports and complement the role of external auditors. We adopt an investigative approach to understand the role responsibility, liability of both these watchdogs in relations to auditing, internal control and financial reporting to the shareholder and investors of the company. We find that both external auditor and audit committee are important determinants of corporate governance frameworks for shareholder and investor protection. The role, responsibility and liability of an external auditor are clearly articulated, while audit committee as a watchdog performs the oversight function rather auditing the accounts. We also find no consensus on audit committee liability in case of audit failure and their ability to enhance auditor independence. The study implicates that it the auditor, who are the first line of defense for shareholders, with audit committee just playing the complementing role. It will be better for regulators to give more powers to auditors with an increased liability to prevent any auditing or corporate failure. Efforts are required to ensure audit committee independence in assuring auditor independence.