AUDITOR

An audit is an independent financial review giving a third party analysis of the financial statements of a company or any other legal entity (including governments), resulting in the production of an independent opinion on whether or not those financial statements analyzed are true and accurate and a representation of transactions verified by their respective means.

Financial audits are typically performed by firms of practicing accountants who specialize in this field who know the correlation or have pertinent data as a reference as to what the figures being audited do or do not follow a pattern. They have an idea of the expected outcome for any particular scenario due to the specialist financial reporting knowledge they possess. The financial audit is one of many assurance or attestation functions provided by accounting and auditing firms, whereby the firm provides an independent opinion on published information.

Many organizations separately employ or hire internal auditors, who are not to do prove that the figures in the financial reports are correct but to focus mainly on the internal workings of the organization, however external auditors may choose to ignore the work of internal auditors and carry on their own investigations.

Financial audits exist to add credibility as to the truthfulness and capabilities of an organization's management that its financial statements fairly represent the organization's position and performance to the firm's stakeholders (interested parties). The principal stakeholders of a company are typically its shareholders, but other external parties such as taxation, financial institutions, regulators, suppliers, customers and employees may also have an interest in ensuring that the financial statements are accurate and that the figures reflect the health and earning capacity of the company.

Audits are carried out to minimize or discount the possibility of material misstatement. Definition of a misstatement could be ..." false or missing information, fraudulently entered (including intentional misstatement) or transcription error (normally decimal point in wrong place or digits swapped around ...)"... Material is very broadly defined as being sufficiently big enough or critical enough to cause stakeholders to reconsider or change their decisions.