An audit is an independent review of an organization’s financial records and operational procedures. Its main goal is to offer assurance to stakeholders—including shareholders, creditors, and regulatory bodies—that the financial statements accurately reflect the organization’s financial performance and position.

Audits are carried out for a variety of reasons, such as meeting legal or regulatory obligations, uncovering fraud or inefficiencies, and evaluating the effectiveness of internal controls. Depending on the organization’s requirements, audits may be performed by internal staff or external professionals.

The auditing process generally involves a thorough review of financial documents like income statements, balance sheets, and cash flow statements, as well as assessments of operational practices. Auditors apply different methods, including transaction testing, document reviews, and internal control evaluations, to gather the evidence needed to form their audit opinion.

At the end of the process, auditors issue a formal report summarizing their findings and providing an opinion on the reliability of the financial statements. A favorable opinion indicates that the financial records are free of material misstatements, offering confidence to stakeholders. On the other hand, an unfavorable opinion signals significant errors or weaknesses in financial reporting or internal controls.