Audit

From Wikicpa

An audit is an evaluation of an organization, system, process, project or product. It is performed by a competent, independent, objective, and unbiased person or persons, known as auditors. The purpose is to make an independent assessment based on management's representation of their financial condition (through their financial statements). Another purpose of the audit is to ensure the operating effectiveness of the internal accounting system is in accordance with approved and accepted accounting standardizations, statutes, regulations, or practices. It also evaluates the internal controls to determine if conformance will continue, and recommends necessary changes in policies, procedures or controls. Auditing is a part of some quality control certifications such as ISO 9000.

Audits evaluate conformance now and into the future. An inspection evaluates conformance in the past. Both are important parts of management.

Financial audit

An important type of audit is the financial audit. It is designed to determine whether financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP). In the United States, financial audits are required for all publicly registered companies. In addition, financial audits may be performed for private companies, registered charities, and some governmental and public entities.

Government financial reports are not always audited by outside auditors. Some governments have elected or appointed auditors.