Auditing is the process of examining accounting documents and their supporting evidence for the purpose of reaching an informed opinion concerning their propriety. What this means is that checks are made of financial documents and statements of the company or business that is being audited to ensure that everything has been entered correctly in the books of the business. Audits usually reveal any discrepancies that may exist in the documents and Auditors then make recommendations as to how these can be rectified. The business then tries to implement the measures so as to prevent a recurrence of the same issues.
Auditing also helps a business to see how good or bad it is doing. Based on audited financial statements, a business will know exactly how profitable (or not) it is and what profit (or loss) it made over the period being audited, both before and after tax. This is good for companies as it helps them to see where in the market they are and what areas need to be brushed up on in order to produce better financial results by the time the next audit is due.
