Audit facts for kids

An audit is like a careful check or an examination of something. Imagine someone looking closely at a game to make sure everyone is playing by the rules, or checking your homework to see if all the answers are correct. That's a bit like what an audit does!

Some typical stages in the audit process

Audits can be done for many things. They can check a person's records, a company's money, buildings, computer systems, or important documents. The main goal is always to make sure everything is accurate, fair, and follows the rules.

What is an Audit?

An audit is a detailed look at something to make sure it is true and correct. It's usually done by someone who is independent, meaning they don't have a personal interest in the outcome. This helps make sure the check is fair and honest.

Why Do We Need Audits?

People and organizations need audits for many reasons. They help build trust and make sure things are done properly.

• Checking for Fairness: Audits make sure that information, especially about money, is presented fairly and accurately.
• Following Rules: They check if people or companies are following important rules and laws, like paying the right amount of taxes.
• Making Good Decisions: When information is audited, people can trust it more. This helps banks decide if they should lend money, or helps people decide if they want to invest in a company.
• Improving Things: Audits can also find areas where things could be done better or more efficiently.

Who Performs Audits?

Audits are usually done by trained professionals called auditors. These people have special skills and knowledge to examine records and systems carefully.

• Internal Auditors: Some companies have their own auditors who work inside the company. They help the company improve its own operations and make sure everything is running smoothly.
• External Auditors: Other auditors work for separate companies. They are hired to check a company's financial records from the outside. This makes their opinion very independent and trustworthy.

Types of Audits

There are different kinds of audits, depending on what is being checked.

• Financial Audits: These are the most common type. They check a company's financial statements. Financial statements are like reports that show how much money a company has, how much it earns, and how much it spends.
• Operational Audits: These audits look at how well a company's different parts or processes are working. They aim to find ways to make things more efficient and effective.
• Compliance Audits: These checks make sure that a person or company is following specific rules, laws, or agreements. For example, checking if a factory follows environmental safety rules.

Financial Audits Explained

Many businesses share information about their money and how they operate. They do this through documents called financial statements. These statements are important for many people.

• Banks: Banks look at financial statements to decide if a company is strong enough to pay back a loan.
• Governments: Governments use these statements to make sure companies are paying the correct amount of taxes.
• Investors: People who want to put their money into a company (investors) look at these statements to decide if it's a good place to invest.
• The Public: Sometimes, companies share their financial information with the public to show they are responsible and successful.

An audit of financial statements helps everyone trust that the numbers are real and correct. This trust is very important for businesses and the economy.

See also

In Spanish: Auditoría para niños