an official examination and verification of accounts and records,especially of financial accounts.

2.
a report or statement reflecting an audit; a final statement of account.
3.
the inspection or examination of a building or other facility to evaluateor improve its appropriateness
, safety, efficiency, or the like:
Auditing
Formal Definition: A systematic process of (1) objectively obtaining and evaluating evidence regarding assertions
about economic actions and events to ascertain the degree of correspondence between those assertions and
established criteria and (2) communicating the results to interested users.
Informal Definition: An auditor's job is to ensure the integrity of financial data. When performing an audit, an
auditor will request access to the business' financial records. This includes the ledgers, lists of receipts and
expenditures, bank balances, records of physical assets owned or leased and many other records. The auditor
will also interview personnel and review the business' accounting system and its internal controls. In essence,
the auditor will review any activity that affects the business' finances.
Audits exist because they add value through easing the cost of information asymmetry, not just because they are
required by law. For example, a privately-held company that does not issue securities on a public exchange
might engage a firm to audit its financial statements in order to obtain more desirable loan terms from a financial
institution. Without the audit, the lending party would not have assurance as to whether or not the company's
financial position is accurate. In turn, the lender could price protect (raise their price) against this information
asymmetry.
An auditor working for a private business may review a client's banking and other financial statements, to verify
that they have been correctly prepared and appropriately reported as required by the law. Auditors must keep
themselves educated of any changes in law that will affect how their clients must report financial information. It is
important that the auditor be able to give an unbiased evaluation of a client's records.
Auditors are not expected to guarantee that 100 percent of the transactions are recorded correctly. They are only
required to express an opinion as to whether the financial statements, taken as a whole, give a fair
representation of the organization's financial picture. In addition, audits are not intended to discover
embezzlements or other illegal acts. Therefore, a "clean" or unqualified opinion should not be interpreted as an
assurance that such problems do not exist.