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 Just like all non-profits that handle a large amount of money, MACH receives independent audits for tax purposes and compliance annually. al, "How parking meters are helping Montgomery’s homeless," 7 Feb. 2020 The final results of the Iowa caucuses remained in limbo as Democratic National Committee Chairman Tom Perez on Thursday called for a recanvass, or audit of the paper results from each precinct caucus. Sabrina Siddiqui, WSJ, "What to Watch for in Friday’s Democratic Debate," 7 Feb. 2020 For all the investments, states have come to believe more in paper than machines, particularly as a way to verify votes and conduct post-election audits. Kristine Phillips, USA TODAY, "Despite Iowa caucus disaster, U.S. election systems are better than you think. Really.," 5 Feb. 2020 The audit, as previously reported by The News, did expose more questionable practices, including free AT&T tickets that Candice and Jeremiah Quarles accepted to attend two exclusive Cotton Bowl dinners. Miles Moffeit, Dallas News, "DeSoto residents assail officials for ‘narrow’ audit," 4 Feb. 2020 The rules and regulations, flow charts, quality reviews, audits and PowerPoints that form the main substance of their working life inevitably color their view of politics or even morality . David Graeber, The New York Review of Books, "The Center Blows Itself Up: Care and Spite in the ‘Brexit Election’," 13 Jan. 2020 Even now, nearly a whole election cycle later, about a quarter of the states do not insist on voting equipment that generates the paper trails needed for rigorous postelection audits. Wade Roush, Scientific American, "Truly Secure Voting Is on the Way," 13 Jan. 2020 The Anti-Defamation League publishes its own annual audit of anti-Semitic incidents. Adeel Hassan, New York Times, "‘A Different Era’: Anti-Semitic Crimes, and Efforts to Track Them, Climb," 3 Jan. 2020 During its audit, Roseville will seek to identify and train an internal candidate at Falcon Heights to assume the role as chief, Thongvanh added. Tad Vezner, Twin Cities, "Unable to find willing fire chief, Falcon Heights contracts with Roseville for the role," 12 Dec. 2019 Recent Examples on the Web: Verb USA TODAY Taxes are one of life’s certainties, but getting audited by the IRS is increasingly less certain these days. Aimee Picchi, USA TODAY, "Taxes 2020: These two groups of taxpayers face the highest audit rates," 31 Jan. 2020 In November, the board agreed to pay up to $200,000 to CliftonLarsonAllen to conduct a forensic examination of the trust's books, which had been audited since 2007 by Heinfeld, Meech & Co. of Tucson. Craig Harris, azcentral, "'Very troubling' accounting errors at Arizona's public safety pension fund could cost cities, state," 9 Jan. 2020 The system hired an outside firm to audit the contracts, and state auditors also plan to look at the system’s books before year’s end. Meredith Cohn, baltimoresun.com, "Given UMMS profits, critics ask why it's seeking to raise rates at flagship hospital," 6 June 2019 The city brought in London firm Sound Diplomacy to audit and advise how to best grow Huntsville’s musical resources. Ben Flanagan | Bflanagan@al.com, al, "Here are Alabama’s Entertainers of the Year," 31 Dec. 2019 The simple truth is this: Any company that fails to audit an algorithm for bias before deploying it in health care is courting disaster. Rebecca Robbins, STAT, "3 stories to watch in health tech in 2020," 24 Dec. 2019 The robbery is an opportunity for the museum and others around the world to audit and improve security on priceless collections. Caroline Delbert, Popular Mechanics, "How Thieves Just Pulled Off the Largest Treasure Heist Since World War II," 25 Nov. 2019 The agency previously removed a rule that prevented a firm from auditing a fund while also borrowing money from a lender with a stake above a certain threshold in the same fund. Mark Maurer, WSJ, "SEC Proposes Loosening of Auditor Independence Rules," 30 Dec. 2019 The whistle-blower’s account focuses on the integrity of the government’s system for auditing the president and vice president’s tax returns. BostonGlobe.com, "The whistle-blower’s account focuses on the integrity of the government’s system for auditing the president and vice president’s tax returns.," 4 Oct. 2019

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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Time Traveler for audit

Time Traveler

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

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Statistics for audit

Last Updated

12 Feb 2020

Cite this Entry

“Audit.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/auditability?pronunciation&lang=en_us&dir=a&file=audit01v. Accessed 17 Feb. 2020.

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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
How to pronounce audit (audio)

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

Thesaurus: All synonyms and antonyms for audit

Rhyming Dictionary: Words that rhyme with 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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