What does an Audit involve?

An audit involves an objective examination of a firm's financial documents, ensuring that the records accurately represent the financial position of the organization and comply with accounting standards and regulations. This process typically includes reviewing balance sheets, income statements, cash flow statements, and other financial records. An audit is conducted to provide stakeholders, such as investors, creditors, and regulatory agencies, with assurance regarding the validity and reliability of the financial information presented.

By focusing on a comprehensive review rather than a limited or subjective evaluation, audits help to promote transparency and maintain trust in the financial reporting process. This objective nature is crucial because it distinguishes audits from informal assessments or personal reviews that may lack rigor and independence. The role of an audit extends beyond mere tax-related documentation or performance evaluations, as it encapsulates a broader scope focused on overall financial integrity and adherence to applicable standards.