What is an Audit?
A financial audit is a review of the financial statements of a business to ensure the records are fair and accurate. It can be performed by people within the company or through an external public accounting firm and can be completed for the entire organization or for a specific function, process, or manufacturing step. Most companies have an annual audit of their financial statements including the income statement, balance sheet and cash flow statements to ensure the finances are up to date and correct. While financial audits are one of the most commonly performed, there are other audits are for administrative purposes, such as reviewing paperwork, risk, or performance, or following up on remedial steps that have already been taken.
A process audit ensures a business’ processes are in proper order – for example, it will check that resources are utilized efficiently and that procedures, work instructions, flowchart, training, and process specifications, operate as they should. Product audits look at a specific product or service, such as hardware, processed materials, or software, to determine whether it fits the demands of the organization. A system audit checks that the business’ management system is efficient.