audit

noun
au·​dit | \ ˈȯ-dət How to pronounce audit (audio) \

Definition of audit

 (Entry 1 of 2)

1a : a formal examination of an organization's or individual's accounts or financial situation The audit showed that the company had misled investors.
b : the final report of an audit
2 : a methodical examination and review an energy audit of the house

audit

verb
audited; auditing; audits

Definition of audit (Entry 2 of 2)

transitive verb

1 : to perform an audit of or for audit the books audit the company
2 : to attend (a course) without working for or expecting to receive formal credit audited a foreign language course

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Other Words from audit

Verb

auditability \ ˌȯ-​də-​tə-​ˈbi-​lə-​tē How to pronounce auditability (audio) \ noun
auditable \ -​ˌȯ-​di-​tə-​bəl How to pronounce auditable (audio) \ adjective
auditee \ ˌȯ-​də-​ˈtē How to pronounce auditee (audio) \ noun

Examples of audit in a Sentence

Noun

The Internal Revenue Service selected us for an audit. You will need all your records if you are selected for audit by the IRS.

Verb

They audit the company books every year. The Internal Revenue Service audited him twice in 10 years. I audited an English literature class last semester.
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Recent Examples on the Web: Noun

Considered the ultimate medical audit, an autopsy can be categorized by five different rulings for cause of death: natural, accident, homicide, suicide, or undetermined. Maude Campbell, Popular Mechanics, "The Complete History of the Autopsy," 26 Dec. 2018 Without that audit, of course, there's nothing to say that IVPN is not all a clever fake. Jim Salter, Ars Technica, "Testing WireGuard with an early-adopter VPN service," 11 Dec. 2018 That coalition called for sustained transparency, an independent and worldwide public audit, and a public commitment to equal enforcement of standards across every territory that Facebook is active in. Jon Porter, The Verge, "Facebook admits it screwed up on Myanmar — but it refuses to take all the blame," 6 Nov. 2018 The top killer, according to an internal Florida Department of Corrections audit: synthetic marijuana, more commonly called K2 or Spice — the same substance found in the Pennsylvania prison system. Talia Kirkland, Fox News, "Synthetic marijuana use among inmates a ‘disaster waiting to happen,’ expert says," 18 Sep. 2018 His practice emphasizes on the areas of taxation, estate and business planning with a special emphasis on tax controversy matters including tax litigation, audits, appeals, offshore disclosure and tax collection defense. Sergio Carmona, Jewish Journal, "Lawyer re-elected president of Alpert JFCS," 12 July 2018 After that audit, U.S. Sen. Claire McCaskill, D-Missouri, called for a federal investigation. Steve Vockrodt, kansascity, "Things still aren’t going well for Missouri hospital skewered by an audit last year," 11 July 2018 Remaining funds are budgeted for overhead, an audit, insurance and safety/community outreach. Tom Daykin, Milwaukee Journal Sentinel, "Campaign to terminate Milwaukee Bay View Business Improvement District apparently succeeds," 6 July 2018 Vitti has been up against a curriculum deemed weak and outdated by an audit, and an independent review of facilities that found $500 million is needed to fix the district's school buildings. Lori Higgins, Detroit Free Press, "Appeal planned in Detroit literacy lawsuit tossed by federal judge," 2 July 2018

Recent Examples on the Web: Verb

For accountability’s sake, audits like the new one by ISE are important. Geoffrey A. Fowler, The Seattle Times, "Password managers have a security flaw, but you should still use one," 19 Feb. 2019 Federal authorities first audited Poindexter’s paperwork in 2008. Geoffrey Mohan, latimes.com, "Raids and tariffs? We'll take our lumps, say California farmers," 21 Apr. 2018 Zadegan had asked Horn, through Cure53, to audit Cyph's service to check for hacking vulnerabilities. Bloomberg News, OregonLive.com, "How a 22-year-old discovered the worst computer chip flaws in history," 22 Jan. 2018 An independent monitor would audit IAV’s compliance practices for two years as part of the agreement. Maria Armental, WSJ, "Volkswagen Supplier to Plead Guilty to Conspiracy, Pay $35 Million Fine in Emissions-Cheating Probe," 18 Dec. 2018 Now co-founder Kate Crawford, a researcher at Microsoft, say the integration of ADS into government services has outpaced our ability to audit these systems. James Vincent, The Verge, "When algorithms go wrong we need more power to fight back, say AI researchers," 8 Dec. 2018 But pressure eventually led to the company’s auditing its factories for health and safety issues. Lorraine Mirabella, baltimoresun.com, "Supermarket giants play role in mistreatment of global food workers, report says," 20 June 2018 President Trump, who has refused to release his tax returns, has complained that the IRS unfairly audited him for years. Richard Rubin, WSJ, "Senate Confirms Charles Rettig as IRS Commissioner," 12 Sep. 2018 Documents obtained by The Times reveal that the IRS audited Fred Trump’s 1995 gift tax return and concluded that Fred Trump and his wife had significantly undervalued the assets being transferred through their GRATs. Susanne Craig, The Seattle Times, "Trump engaged in suspect tax schemes as he reaped riches from father," 2 Oct. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'audit.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of audit

Noun

15th century, in the meaning defined at sense 1a

Verb

15th century, in the meaning defined at sense 1

History and Etymology for audit

Noun

Middle English audyte "examination of accounts, judicial hearing," borrowed from Medieval Latin audītus "sense of hearing, act of listening, right to judicial hearing, examination of accounts," going back to Latin, "sense or act of hearing," from audīre "to hear" + -tus, suffix of action nouns — more at audible entry 1

Note: The sense "examination of accounts," attested relatively late in Medieval Latin, is based on the word audītor, which in the meaning "one who examines accounts" is recorded much earlier—see auditor.

Verb

Middle English audyten, derivative of audyte audit entry 1; in sense 2 back-formation from auditor

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Statistics for audit

Last Updated

23 Apr 2019

Look-up Popularity

Time Traveler for audit

The first known use of audit was in the 15th century

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More Definitions for audit

audit

noun

Financial Definition of audit

What It Is

In the tax world, an audit refers to the review of a taxpayer's tax return for accuracy.

In the accounting world, an audit is the examination and verification of a company's financial statements and records, and in the United States, examination for their compliance with Generally Accepted Accounting Principles (GAAP).

How It Works

Accounting professionals, usually Certified Public Accountants (CPAs), perform audits. These auditors must be independent, unbiased, and qualified to provide an auditor's report (also called an opinion).

There are four major steps in the audit process:

-- Defining the terms of the engagement between the auditor and the client
Planning the scope and conduct of the audit
Compiling the audited information
Reporting the results of the index audit

The terms of an engagement are usually set forth in an engagement letter that is written by the auditor and signed by the client. The letter documents the auditor's role and addresses any specific issues. The audit plan defines the scope of the audit and key deadlines. Quite often the company's audit committee (primarily composed of board members) reviews and approves the audit plan.

One of the goals of a financial audit is to find and correct any material misstatements, which are statements that are wrong, missing, or incomplete whether made deliberately or accidentally. This is why auditors must be able to drill down to the source of each piece of data (this is called the audit trail). To compile the information necessary to do this, an auditor does many things. For example, the auditor tests the transactions and account balances that make up the financial statements as well as the design and operation of the systems that generated those statements.

Auditors also employ sampling techniques, whereby they evaluate less than 100% of the items within an account or class of transactions as a way to understand the nature of the entire account or class of transactions. For example, an auditor will usually not check every expense report in a large company to make sure each has receipts attached. Instead, the auditor will pull a random sample of the reports, examine those, and draw conclusions about the quality of the information and controls related to expense reports. Auditors also analyze significant trends or ratios and question changes or variances from predicted amounts. Further, they investigate the reasonableness of management's accounting estimates of uncertain events or events that are likely to occur (such as the outcome of litigation).

Auditors perform their audit procedures in accordance with the International Auditing and Assurance Standards Board (IAASB), which is a committee of the International Federation of Accountants (IFAC). The IAASB develops standards and guidance that are considered best practices for auditors. The IFAC also sets ethical and independence standards for auditors and in particular emphasizes that auditors should be, and be seen to be, free from any influence that might jeopardize their independence. The SEC and other regulatory bodies determine which types of entities are subject to audit as well as the kind of information on which the auditor should report.

Audits can take a few days or several months, depending on the complexity of the financial statements and the degree to which the auditor inspects the company's financial statements and controls. When the audit is complete, the auditor publishes the audit findings in the auditor's report, which prefaces the financial statements in the company's public reports and filings. This report is usually the only public document available about the audit process, but the auditor often issues private reports to the company's management or audit committee as well as to regulatory authorities. The index auditor keeps extensive written records, called working papers, that provide the basis and support for each of its opinions.

When an auditor feels that a company's financial statements are fair and accurate, it issues an unqualified opinion and does so using a standard reporting template (this is why many opinions read the same way). An audit report also includes a statement that the international audit was conducted in accordance with GAAP. When the auditor cannot give an unqualified opinion, it issues a qualified opinion, which lists the reasons for the auditor's concern about the company's financial statements and controls and the possible effects on the financial statements. The auditor is not responsible for auditing transactions that occur after the date of the audit report.

Why It Matters

An audit's objective is to help the auditor form an opinion of the trueness and fairness of a company's financial statements. This is done for the sake of the shareholders, regulatory authorities, lenders, and other people with an interest in the health of the company.

There is always a chance that an auditor gives an unqualified opinion when in fact the financial statements are materially misstated. This is called audit risk, and the auditor must use his or her judgment about how much is acceptable and what errors are material enough to warrant the restatement of the financials. In these situations, the definition of the word material becomes especially important, because shareholders, lenders, and other interested parties make crucial decisions based on the quality of the information in a company's financial statements.

It is very important to understand that auditors are not responsible for detecting all instances of fraud or financial misrepresentation. This is the responsibility of the management of the company. However, the auditor should conduct the audit in a manner that would reasonably detect at least some material misstatements caused by fraud or error. In those cases, the auditor should probe the issue and pursue the audit trail for questionable transactions. To mitigate these errors and problems, companies often have employees known as internal auditors who perform ongoing audit functions. These internal auditors review not only the company's financial statements but also the company's control practices and other critical operations and systems. Internal auditors are often, but not always, accountants.

Source: Investing Answers

audit

noun

English Language Learners Definition of audit

 (Entry 1 of 2)

: a complete and careful examination of the financial records of a business or person
: a careful check or review of something

audit

verb

English Language Learners Definition of audit (Entry 2 of 2)

: to check the financial records of (a business or person) : to perform an audit on (a business or person)
US : to attend a course at a college or university without having to do any of the course work and without receiving credit

audit

noun
au·​dit | \ ˈȯ-dət How to pronounce audit (audio) \

Kids Definition of audit

 (Entry 1 of 2)

: a thorough check of business accounts

audit

verb
audited; auditing

Kids Definition of audit (Entry 2 of 2)

: to thoroughly check the business records of

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audit

noun
au·​dit | \ ˈȯ-dət How to pronounce audit (audio) \

Legal Definition of audit

: a formal examination of financial records often to uncover fraud or inaccurate tax returns also : the final report of such an examination

Other Words from audit

audit verb

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More from Merriam-Webster on audit

Rhyming Dictionary: Words that rhyme with audit

Thesaurus: All synonyms and antonyms for audit

Spanish Central: Translation of audit

Nglish: Translation of audit for Spanish Speakers

Britannica English: Translation of audit for Arabic Speakers

Comments on audit

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