The
most general definition of an audit is an
evaluation of a person, organization, system,
process, project or product. Audits are
performed to ascertain the validity and
reliability of information, and also provide an
assessment of a system's internal control. The
goal of an audit is to the
person/organization/system etc. under evaluation
based on work done on a test basis. Due to
practical constraints, an audit seeks to provide
only reasonable assurance that the statements
are free from material error. Hence, statistical
sampling is often adopted in audits. In the case
of financial audits, a set of financial
statements are said to be true and fair when
they are free of material misstatements - a
concept influenced by both quantitative and
qualitative factors.
Traditionally audits were mainly associated with
gaining information about financial systems and
the financial records of a company or a business
(see financial audit). However recently auditing
has begun to include other information about the
system, such as information about environmental
performance. As a result there are now
professions that conduct environmental audits.
In financial 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
an auditor's report on the results of the audit.
Such systems must adhere to generally accepted
standards set by governing bodies that regulate
businesses. It simply provides assurance for
third parties or external users that such
statements present 'fairly' a company's
financial condition and results of operations.
In the US, audits of publicly-listed companies
are governed by rules laid down by the Public
Company Accounting Oversight Board (PCAOB). Such
an audit is called an Integrated Audit, and
auditors have the additional responsibilities of
expressing opinions on management's assessment
of the firm's internal control, and on the
effectiveness of internal control over financial
reporting based on their (the auditors') own
assessment. These requirements are
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