In additional to the basic financial audit, there are a number of other business-related audits that are commonly carried out in a company. This is done to make sure that all legal and financial bases are covered, and no fraudulent activities are being carried out in the business itself.Įssentially, an audit is a thorough investigation of a business’ activities to make sure needs are being met. Shareholders and investors typically request an audit of the company they support. Typically, a financial audit is carried out by an employee of the business, a public accountant, or a third-party platform.įor the most part, financial audits are carried out on a yearly basis and involve examining a company’s income statements, balance sheets, and cash flow statements. Financial audits are done to make sure that the financial records of a business reflect an accurate representation of the operational transactions they claim to represent. However, the most common type of auditing in the business world for the sake of a definition is financial auditing.Ī financial audit is an objective examination, as well as an evaluation of a business’s financial statements and documents. Let’s look into how auditing relates to business operations.Īuditing is a very broad concept, which we’ll dive into in our next section. However, audits have purposes outside of tax season and are used by businesses regularly to keep their operations in order. This can certainly be stressful, which is why “audit” seems to be a dirty word. The IRS generally opens an audit on a taxpayer when their taxes don’t quite add up. The word “audit” is typically associated with the Internal Revenue Service (IRS). What is Auditing? Everything Business Owners Need to Know This can certainly be stressful, which is why "audit" seems to be a dirty word. The IRS generally opens an audit on a taxpayer when their taxes don't quite add up.
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