What is the definition of an audit?

The definition of an audit is an independent examination of financial information to ensure accuracy and compliance with applicable standards. This encompasses a thorough review of financial statements, records, and related documents to verify that they present a true and fair view of the organization's financial position. Audits are essential in detecting any discrepancies, potential fraud, or errors in financial reporting, which helps maintain the integrity of financial information.

An audit is not limited to an internal review of employee performance, as audits specifically focus on financial data and compliance rather than individual performance evaluations. Additionally, while financial forecasts are crucial for planning and decision-making, they are not the subject of an audit; rather, audits typically review historical data to confirm its accuracy. Similarly, a routine check of cash flow statements does not encompass the broad scope of an audit, which looks at multiple financial documents and adheres to specific standards and regulations. Thus, the correct answer highlights the comprehensive nature and purpose of an audit within financial practices.