An audit is an independent and systematic examination of an organization's financial reports and records to ensure their accuracy, fairness, and compliance with relevant accounting standards and regulations. It is usually conducted by qualified professionals who are not part of the organization being audited, providing an objective assessment of the financial statements such as the balance sheet, income statement, and cash flow statement
. The main purpose of an audit is to give stakeholders-such as investors, creditors, regulators, and the public-confidence that the financial information presented truly reflects the organization's financial position and performance without material misstatements or fraud
. Auditors follow established auditing standards and procedures to gather evidence, evaluate controls, and form an opinion on the reliability of the financial statements
. Audits can be categorized broadly into:
- Financial audits : Focus on verifying the fairness and accuracy of financial statements and accounting records
- Performance or management audits : Assess the efficiency and effectiveness of programs, operations, or management practices, often in government or public sector contexts
- Internal audits : Conducted within an organization to improve internal controls and operational processes
- Compliance audits : Verify adherence to laws, regulations, or contractual agreements
Overall, an audit serves as a tool for transparency, accountability, and improvement by comparing actual results against established criteria or standards
. The term "audit" originates from the Latin word audire , meaning "to hear," reflecting the auditor's role in listening, observing, and questioning to gather evidence
