What is an audit

Audit means accounting control, and it involves an external party reviewing and approving the financial conditions of a company. An audit is a way to determine if the annual financial statements or other aspects of a company have been carried out in accordance with laws and regulations.

The audit is carried out by an external auditor.

Which companies are required to undergo an audit?

All entities that disclose information, public corporations, and large proprietary companies are obligated by law to undergo an annual financial statement audit.

Companies are characterised as large when they meet two of the following criteria:

  1. A consolidated revenue exceeding $50 million
  2. Consolidated gross assets greater than $25 million
  3. 100 employees or more

This guide explains audit exemptions in detail.

How does an audit work?

An audit should be carried out by someone who is completely independent and has no ties to the company to ensure it is unbiased. This means the auditor is usually external.

While there aren’t strict rules on how frequently you should audit your company, it’s generally a good idea to do it every year, especially if there have been significant changes within the company. Besides checking the books, auditors can also offer advice on best practices. This helps ensure that the company’s accounting and operations comply with relevant laws and regulations.