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

And an audit completed earlier this spring did not find other wrongdoing by school officials. Doug Donovan, baltimoresun.com, "Baltimore County NAACP calls for ethics probe of state delegate for 'hang them high' Facebook comment," 14 June 2019 Now that council has accepted the audit, its results can be released to the public. cleveland.com, "Audit of former Highland Heights mayor Coleman’s city dealings finds no wrongdoings," 14 June 2019 The 2019 DOVE Award for long-standing commitment to advocating for those affected by relationship violence went to Newport Beach resident and Human Options board vice president Celina Doka, audit partner in KPMG’s Orange County office. Coast Magazine, Orange County Register, "Human Options’ Serious Fun Gala raises $520,000 to help end domestic violence," 14 June 2019 From 2017 to 2018, legal and audit spending jumped from $12.9 million to $33.5 million. The Washington Post, The Mercury News, "A look inside the finances of the NRA," 14 June 2019 The goal was to do 217 audits by the end of this fiscal year, which ends this month. Russ Wiles, azcentral, "Sales taxes go uncollected, businesses slip through cracks under Arizona's business-friendly efforts," 13 June 2019 The board violated best practices by having Pevenstein chair both the financial and audit committees, the review found. Rachel Chason, Washington Post, "UMMS contracts were not competitively bid or properly disclosed, probe finds," 12 June 2019 Mayor Greg Fischer's administration still isn't giving up the goods on a 2017 Microsoft software licensing audit, but a contract obtained by the Courier Journal shows Louisville is paying $664,910.44 over three years to come into compliance. Darcy Costello, The Courier-Journal, "Louisville is paying $664K for software compliance after a 2017 Microsoft audit," 12 June 2019 To that end, DSOs are independently audited each year and their annual audit report must be submitted to the Florida Auditor General and the state university system’s Board of Governors. Michael Mccann, SI.com, "How Transforming Into a DSO Could Impact Florida State's Athletic Department," 11 June 2019

Recent Examples on the Web: Verb

One example cited: Last budget year, which ended in June 2018, the department audited just 37 of the 284,000 businesses with sales tax licenses in Arizona. Russ Wiles, azcentral, "Sales taxes go uncollected, businesses slip through cracks under Arizona's business-friendly efforts," 13 June 2019 To combat abuse, the state would be required to inspect and audit a portion of buildingwide improvements. New York Times, "Landmark Deal Reached on Rent Protections for Tenants in N.Y.," 11 June 2019 Only two states, Colorado and New Mexico, conduct manual audits sufficiently robust to detect vote tally manipulation. Jennifer Cohn, The New York Review of Books, "Jennifer Cohn," 5 Nov. 2018 Qualcomm says that the master software agreement signed by the two companies has a provision allowing Qualcomm to audit Apple's compliance but that Apple hasn't allowed such an audit. Jon Brodkin, Ars Technica, "Apple stole Qualcomm chip secrets and gave them to Intel, Qualcomm claims," 25 Sep. 2018 The statements were audited by Grant Thornton UK LLP. Nina Trentmann, WSJ, "Administrator Sells Brands of Defunct U.K. Coffee Chain Patisserie Holdings," 14 Feb. 2019 The Steigenberger Aqua Magic was last audited by Thomas Cook in July and received an overall score of 96 percent. Menna Zaki And Haggag Salama, Fox News, "Thomas Cook takes its guests out of Egypt hotel after 2 died," 24 Aug. 2018 Connecticut officials were similarly empowered to audit New York companies. Sam Roberts, New York Times, "James H. Tully Jr., Former New York State Tax Chief, Dies at 87," 18 June 2018 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

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

18 Jun 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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