Legal Definitions - audit

Definition: An audit is a formal examination and verification of an individual’s or organization’s records and accounts, finances, or compliance with a set of standards. To audit is the act of conducting the formal examination and verification.

Example: A company hires an external auditor to review their financial statements and ensure that they are accurate and comply with accounting standards. The auditor examines the company's financial records, such as bank statements, invoices, and receipts, to verify that the information presented in the financial statements is correct.

Explanation: In this example, the company is undergoing an audit to ensure that their financial records are accurate and comply with accounting standards. The external auditor conducts a formal examination of the company's financial records to verify that the information presented in the financial statements is correct.