private accounts non-profit
public check (2) object (2)
benefit examine accountant
shares make sure confidence
supplier involved shareholder
ensure standard procedures
replace accurate regulation
satisfy follow (2) regulatory body
balance available balance sheet
loose credibility financial statement
hearing technique originated
role accurate at that time
fair objective subjective
detect carry out gradually
fraud demand requirement



Audit is the examination and checking of financial accounts by a professional auditor (accountant) who has had no part in their preparation. The accounts may be those of a public, private, or non-profit organization.

Purpose of Audit

The object of the audit is to make sure that the accounts of the organization give a true and accurate picture of business activities. The audit is an important part of accounting.

Most Companies have a Audit

In many countries, all but the smallest companies have their accounts audited by an auditor who is independent of the company. Both private companies and public organizations may be required by law to have an audit.

Benefits of Audits

An organization which has its accounts audited benefits because of the confidence it gives to the shareholders, banks, suppliers, and any others involved in its activities.

An audit ensures that professional accountancy procedures and standards demanded by the government or regulatory body have been followed.

Information Provided

Auditors must be given the information they need to make sure the accounts are accurate and that the balance sheet and profit and loss accounts are in agreement with account books.

If this information is not made available, the financial statement issued by the auditor will say so and the company will lose credibility.


The word audit comes from the Latin word auditus, meaning a hearing. Auditing began in ancient times.

Modern auditing techniques originated in the United Kingdom during the mid-1800’s.


At that time, the role of the auditor was mainly to satisfy shareholders of a company that their directors’ accounts gave a fair and objective view of the position and results of the company.

Originally shareholders were selected to carry out the audit but gradually they were replaced by professional auditors. The audit was also used to detect fraud.

Large Auditing Firms

More recently the legal requirement for an audit has led to the development of large firms of accountants, who specialize in audits. The larger accountancy firms have branches in most countries of the world to carry out audits.

*     *     *     *     *     *     *



1. What is an audit? An audit is…..
What is the purpose of audits?

2. The auditor can be an employee of the audited organization. True or false? Why or why not?

3. Do only private companies have audits?

4. What does the law say?

5. Auditors check to see that………..

6. If an organization has “passed” its audit,

7. What happens if a company refuses to provide financial information to auditors?

8. Auditing began in the 1900s. True or false? Who were the original auditors in the UK?

9. Has auditing become “industrialized”?
A. Are you an auditor? Have you ever conducted an audit? Do you know anyone who is an auditor?

B. Has your company, institute, or organization been audited? Did you feel nervous?

C. Is auditing difficult, or is it all computerized, automatic, and standardized?

D. Is auditing a good career?

E. All companies, businesses, organizations and governments should be thoroughly audited. Do you agree?

F. What will happen to auditing in the future?


Share Button

Email this page

Comments are closed.