What is audit?

Question

What is audit? What does it mean to be audited?

Answer 1

An audit is a review of documentation to make sure you personally - or even a business - are doing what you are supposed to be doing.

When you are personally audited by the IRS, for some reason, the IRS found something abnormal about your tax return (I'm sure there are some random audits as well) and they want you to show them the proof to what you filed. Many times you will need your W-2's, your charity receipts, etc.

In business, an auditor will make sure that the business practices of a firm or organization are proper and that their account is acceptable.

Answer 2

There are two main types of audits
1. Internal Audits
2. External Audits

Internal audits are performed by company employees. Random (or all) accounting general ledger accounts are choosen and then the check register is used to verify the amounts charged to the gl account.

External audits can be perfomed by the companies outside CPA's, generally associated with publicly traded companies. Another type of external audit is from the IRS. Then they come in with questions on your tax returns and you get to produce any and all receipts/checks they request. Fun, fun!

Answer 3

An audit is an evaluation of an organization, system, process, project or product. In accounting, an audit is an independent assessment of the fairness by which a company's financial statements are presented by its management. It is performed by competent, independent and objective person or persons, known as auditors or accountants, who then issue a report on the results of the audit.

Audits are performed to ascertain the validity and reliability of financial information, and also provide an assessment of a company or a business' system of internal control. Such systems must adhere to generally accepted standards set by governing bodies that regulate businesses. An audit is based on random sampling and is not an assurance that financial statements are free from errors. It simply provides assurance for third parties or external users that such statements present 'fairly' a company's financial condition and results of operations.

Auditing is a part of some quality control certifications such as ISO 9000.

Types of auditors

There are two types of auditors:

* Internal auditor- are employees of a company hired to assess and evaluate its system of internal control. To maintain independence, they present their reports directly to the Board of Directors or to Top Management.

* External auditor- are independent staff assigned by an auditing firm to assess and evaluate financial statements of their clients or to perform other agreed upon evaluations. Most external auditors are employed

Answer 4

audit is a review to ensure things are done according to standards. to be audited is to be reviewed