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Audit

Definition

An audit is an official inspection of an organization's accounts, typically by an independent body. In the context of government, it refers to the examination of records or financial accounts to check their accuracy.

Analogy

Think of an audit like a routine doctor's check-up for your finances. Just as a doctor checks your health parameters to ensure everything is functioning correctly, an auditor examines your financial records to make sure they're accurate and in compliance with laws and regulations.

Related terms

Financial Accountability: This refers to the responsibility of governments or public services organizations in managing and using resources efficiently, effectively, and ethically.

Internal Control: This is a process implemented by management designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws.

Compliance Audit: This type of audit ensures that a subject matter (could be an organization or individual) is following established guidelines, rules or standards set by higher authorities.