|Audit literally means listening
Although in most business contexts, accounts are written
rather than spoken, good auditors "listen" and interpret what they are
what lies buried under the surface (including deliberate
what is absent
|A financial audit is an independent verification of a
set of financial accounts by an independent auditor. Although audit
rules vary from one country to another, the general idea is that auditor
is supposed to verify that the accounts provide a "true and fair" picture
of a company.
Audits can also be carried out for non-financial aspects
of the business, such as social and environmental.
|Auditors represent the interests of outside stakeholders
(including shareholders and creditors), and are supposed to moderate the
authority of the directors. However, the independence of the auditors
may be compromised by three factors.
Auditors are appointed by the directors themselves.
Auditing firms generate further income by selling other services
to the same client.
A company typically uses the same auditors year after year.