What is audit?

Audit: an independent check on the financial accounts of an organisation. It is conducted by auditors who are professional accountants. Auditing is an essential part of accounting.

An audit is an assessment and verification of an organisation’s financial reports and accounting records by qualified auditors (a certified public Accountant). The financial report carries a balance sheet, an income statement, a cash flow statement, a statement of equity, and also other informative records. It is pointed out that although the process should be independent, the fact that the client firm was selecting and paying the auditor might undermine that independence.

All most organisations to the Corporations Act must have an audit each year. Other organisations may require or request an audit depending on their structure and ownership or for a special purpose. There are 2 (two) type of audits: internal audit and external audit.