What is audit?

The term "audit" is well known to accountants and economists. Like many other terms, the word came to us from the Latin language, which translates as "listens".

In a broad sense, auditing is understood as any verification carried out by an independent expert. There are several types of audit: operational, technical, environmental, etc.

Audit in the economic sphere

Audit is an independent examination (verification)financial activity of the organization, which is conducted by specially trained people - auditors. They check whether all financial transactions are not inconsistent with the law, whether the established rules are observed in the conduct of accounting, the activity report is fully and accurately maintained, and so on.

Audit originated with the emergence of monetary relations. Ancient auditors checked commodity (accounting) books of merchants on reliability of the data. Later, the audit was developed on the basis of the division of interests between management companies and those who invest in the performance of their activities (investors, shareholders and owners).

Due to the fact that the risk of financial investmentsinvestors could not believe the financial information provided by the leadership. They wanted to be completely sure that they were not being deceived. Therefore, the shareholders found a way out of this situation by inviting people who could perform the audit and evaluation of the activity. Such auditors must be honest so that investors can trust them.

This little historical information helps to understand what audit is. At the moment there are several types of audit. For example:

  • Initiative audit - conducted at the initiative of the company's management to identify shortcomings in the work of accounting.
  • Internal audit is performed by the organization's own forces to perform operational control.
  • External audit - this audit involves specialists of certain audit firms to obtain an assessment of the company's activities from the outside.
  • Mandatory audit - checking the activity of accounting and financial reporting, which is conducted every year.

No independent organization can function without this independent evaluation.

Ask any questions from the field of accounting in the section Accounting. Audit. Taxes.

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