Short definition: Auditing is the independent examination of an organization’s financial records and statements to ensure they are accurate, complete, and comply with applicable accounting standards and regulations.
Explanation: It is a systematic process conducted by qualified professionals (auditors) to provide an objective assessment of an entity’s financial position and performance. Auditing helps to enhance the credibility and reliability of financial information, providing assurance to investors, creditors, and other stakeholders.
Example: Publicly traded companies are required to have their financial statements audited annually by an independent auditor to ensure they are presented fairly and in accordance with GAAP (Generally Accepted Accounting Principles).
Additional information (optional): There are different types of audits, including financial audits, operational audits, and compliance audits. The scope and objectives of an audit can vary depending on the specific needs of the organization and the requirements of regulatory bodies.