An audit is a systematic and comprehensive examination of records, processes, or financial accounts to verify the accuracy, completeness, and validity of information, often to assess compliance with established rules or standards.
Imagine an audit as checking a big set of rules or a company's books to make sure everything is correct and that everyone followed the right procedures. It’s like checking if the rules are being followed correctly.
It matters because audits provide assurance to stakeholders (like courts or regulators) that the underlying systems, policies, or financial reporting meet established standards, ensuring accountability and proper governance.
Visual model
An internal audit review of a company's financial records to ensure proper accounting practices.
A regulatory audit examining a bank's compliance procedures for loan processing.
Document context
A formal, systematic review process performed by an authorized party to evaluate the accuracy, completeness, and validity of records, processes, or financial accounts, often to ensure compliance with legal or regulatory requirements.
It matters because audits provide assurance to stakeholders (like courts or regulators) that the underlying systems, policies, or financial reporting meet established standards, ensuring accountability and proper governance.
When a legal entity needs to verify the accuracy of its records, assess compliance with internal controls, or evaluate the effectiveness of management decisions within a defined scope.
In regulatory filings, corporate governance reports, financial statements, and compliance reviews within statutes or regulations.
Affected parties include management, auditors (internal or external), regulatory bodies, and stakeholders who rely on the verified information.
The process involves testing documentation against established criteria, identifying discrepancies, assessing risk, and reporting findings to determine if the system or record is functioning as intended under legal scrutiny.
Related terms
Share
Copy the link, open native sharing, or scan the QR code from another device.
Scan to open this glossary page on another device.
Wikipedia
An audit is an "independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon." Auditing also attempts to...
Open on WikipediaKnowledge graph
This layer links the term to nearby glossary entries, document use cases, and contract-risk guides so readers can move from definition to context without dead ends.
Move from term to document
Disclaimer: We do not provide legal advice. We translate legal language into plain English and help you prepare for a conversation with a lawyer.
