The Probert Encyclopaedia of Money

AUDIT

In business, an audit is the inspection of an organization's annual accounts. An external audit is carried out by a qualified accountant, in order to obtain an opinion as to the veracity of the accounts. Under the Companies Acts, companies are required to appoint an auditor to express an opinion as to whether the annual accounts give a true and fair view of the company's affairs and whether they comply with the provisions of the Companies Acts. To give such an opinion, the auditor needs to examine the company's internal accounting systems, inspect its assets, make tests of accounting transactions, etc. Some bodies have different requirements for audit; for example, accountants report to the Law Society on solicitors' accounts under the Accountants' Report Rules. Many companies and organizations now appoint internal auditors to carry out an internal audit, with the object of reporting to management on the efficacy and security of internal systems. In some cases these systems may not even be financial; they may include, for example, an audit of health and safety in the workplace or an audit of compliance with equal opportunities legislation.
Research Audit