Audit

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Audit

An examination of a company's accounting records and books conducted by an outside professional in order to determine whether the company is maintaining records according to generally accepted accounting principles. See: accountant's opinion.

Audit

1. The process of reviewing activities to identify inefficiencies, reduce costs, and otherwise achieve organizational objectives. Audits may investigate potential theft or fraud and ensure compliance with applicable regulations and policies. They also help ensure the accuracy of reports. Audits are an essential part of a company's efficiency.

2. In taxation, the process in which the tax collection agency reviewing the reports of an individual or company to see if all income, deductions, and/or credits reported accurately reflect reality. This is done to ensure that each individual or company pays his/her/its full tax liability. Audits are conducted on a random basis, or when something appears remiss on a tax return. See also: Tax avoidance, Tax evasion.

audit

An examination of an organization's financial documents in order to determine whether the records and reports are valid and the information is fairly presented. An independent audit is usually conducted by a Certified Public Accountant who then issues an opinion as to whether the statements accurately and fairly represent the firm's operations and financial position. See also external audit, internal audit.

Audit.

An audit is a professional, independent examination of a company's financial statements and accounting documents following generally accepted accounting principles (GAAP).

An IRS audit, in contrast, is an examination of a taxpayer's return, usually to question the accuracy or acceptability of the information the return reports.

audit

  1. the legal requirement for a JOINT-STOCK COMPANY to have its BALANCE SHEET and PROFIT-AND-LOSS ACCOUNT (the financial statements) and underlying accounting system and records examined by a qualified AUDITOR, so as to enable an opinion to be formed as to whether such financial statements show a TRUE AND FAIR VIEW of the company's state of affairs and that they comply with the relevant statutes. Auditing involves inspecting documentary evidence of transactions such as INVOICES, STATEMENTS and DELIVERY NOTES to ensure that the DOUBLE-ENTRY accounting entries are complete and authentic.

    Where the auditor is satisfied that the financial statements show a ‘true and fair view’ he will report this to the SHAREHOLDERS in the ANNUAL REPORT AND ACCOUNTS. However, if he is not satisfied that the financial statements show a ‘true and fair view’ or he is unhappy about any explanations given by the managers, then he may make a ‘qualified report’ to the shareholders expressing his precise misgivings.

  2. internal audits of accounting procedures, marketing activities, production operations, quality control systems, and safety may be undertaken to monitor and review the efficiency and effectiveness with which these various activities are undertaken. In addition, a company may undertake a value-for-money audit, to evaluate whether the organization is operating effectively. See also MARKETING AUDIT.

audit

the legal requirement for a JOINT-STOCK COMPANY to have its BALANCE SHEET and PROFIT-AND-LOSS ACCOUNT (the financial statements) and underlying accounting system and records examined by a qualified auditor, so as to enable an opinion to be formed as to whether such financial statements show a true and fair view and that they comply with the relevant statutes. See also ENVIRONMENTAL AUDIT, VALUE FOR MONEY AUDIT.

Audit

An IRS examination and verification of a taxpayer's return or other transactions with tax consequences. An office audit is an audit by the IRS that is conducted in the agent's office. A field audit is conducted by the IRS on the business premises of the taxpayer or in the office of the tax practitioner representing the taxpayer.
References in periodicals archive ?
Government audit reports and related management letters, which discuss any material findings, are prepared following strict professional auditing standards and are available for public review.
In response to court cases stating otherwise, The Ohio Society of CPAs succeeded in working with the Ohio General Assembly in 1991 and 1998 to statutorily ensure that work papers, statements, records, schedules and memorandum associated with a state or local government audit are not public records.
The resulting spike in liability insurance costs would drive a number of firms out of the government audit business.
What happens if government audit work papers become public records?
With these interests of the various parties in mind, here are a few pointers for those facing a government audit:
Your plan for reacting to a government audit's findings should be external (especially involving the media and funders) and internal (including the board, senior staff, other staff, and consumers as appropriate).
The 1988 revision adds a new general standard, "quality control." To meet this standard, organizations conducting government audits should participate in an external quality control review program at least once every three years.
Public accountants who conduct government audits become part of this process.
In doing so, it is important that when conducting audits in accordance with the Government Auditing Standards, the auditor have a thorough understanding of the 1988 revision of the Yellow Book, the AICPA field work and reporting standards, and other audit requirements that may exist for government audits. This understanding is essential to help ensure the quality of government audits.
The task force that developed that report identified the five Es of quality government audits: education, evaluation, engagement, exchange of information and enforcement.
An American Institute of CPAs study of 93 government audits identified common attributes associated with quality audits that practitioners and recipients can use as a basis for improving audit quality.

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