Definition of an audit
In general, an audit consists of evaluation of a subject matter with a view to express an opinion on whether the subject matter is fairly presented. There are different types of audits that can be performed depending on the subject matter under consideration, for example:
• Audit of financial statements
• Audit of internal control over financial reporting
• Compliance audit
This publication only focuses on audits of financial statements, which are undertaken to form an independent opinion on the financial statements of a company.
Companies prepare their financial statements in accordance with a framework of generally accepted accounting principles (GAAP) relevant to their country, also referred to broadly as accounting standards or financial reporting standards. The fair presentation of those financial statements is evaluated by