Audit is an activity to review and verify financial statements, account funds and compliance, aiming at confirming whether they meet the expected standards and requirements. The following will explain the meaning of audit in detail from the aspects of audit type, audit purpose and audit procedure.
1. Audit type
Audit can be divided into internal audit and external audit. Internal audit refers to the audit work carried out by professionals within the company, with the purpose of helping the management of the company evaluate and improve the internal control system, so as to reduce the business risk of the enterprise. External audit is an audit conducted by an independent institution or professional hired by a customer to confirm whether the financial statements and compliance are legal and accurate.
2. Audit purpose
The main purpose of audit is to ensure the accuracy and compliance of enterprise financial statements and account funds, and to find the defects, weak links and hidden dangers of enterprise internal control system. In addition, the audit can also assist the management of the company to evaluate and improve the internal control system, ensure the normal operation of the company, improve efficiency and reduce risks.
3. Audit procedures
Audit procedures include determining audit scope, determining audit objectives, evaluating internal control, collecting and analyzing evidence, reporting findings and tracking. Auditors need to systematically review and verify the company's financial statements, account funds and compliance, and record all results and problems. Finally, auditors need to report to the management of the company, and put forward opinions and suggestions for improvement.
To sum up, audit is a process of reviewing and verifying financial statements, account funds and compliance according to certain procedures.
Its purpose is to confirm whether it meets the expected standards and requirements, discover the defects, weaknesses and hidden dangers of the internal control system of the enterprise, assist the management of the company to improve the internal control system and ensure the normal operation of the company. In addition, the audit procedure needs to be carried out according to certain techniques and methods in order to achieve scientific, objective and reliable results.