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LSDefine
Simple English definitions for legal terms
audit
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A quick definition of audit:
An audit is like a check-up for a person or a company's money and records. It's when someone looks closely at everything to make sure it's all correct and follows the rules. The word "audit" can also be used as a verb, which means to do the check-up.
A more thorough explanation:
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.