Audit

Audit is a systematic inspection or review of books, records, procedures, or operations for the purpose of checking their accuracy, completeness, and adherence to relevant regulations and standards. Audits are carried out by external auditors, internal audit divisions or regulatory agencies to evaluate the truth and trustworthiness of financial data, detect any mistakes or abnormalities and make sure that all legal and regulatory requirements are followed. Audits have varied objectives such as those of financial reporting, internal control assessment, fraud detection and compliance check. The auditing process frequently involves collecting evidence, performing various analyses, and sharing findings and recommendations with the stakeholders.

Example of an Audit:

One of the most popular case of audit is financial statement audit done by external auditors for publicly held companies. In this case, independent auditors examine the company's financial statements, primarily the balance sheet, income statement, and cash flow statement, to verify their accuracy and conformance with accounting principles and regulatory standards. The auditors review the supporting documentations including invoices, receipts and bank statements so as to determine the validity of the transactions and the accuracy and completeness of the financial information. It may also evaluate the internal control and the governance process to pinpoint any loopholes and vulnerabilities that can lead to unreliable financial reporting. With the audit coming to an end, the auditors will present their audit report, which should include their opinion on the fairness of the financial statements. This report gives assurance to the investors, creditors and other stakeholders on the financial solidity and transparency of the company. Generally, audit is one of the key pillars for building trust and confidence in the credibility of accounting figures and internal controls efficiency.