What does it mean to audit financial statements?

Auditing financial statements refers to the process of examining a company's financial records to ensure they are accurate, complete, and in accordance with relevant accounting standards and regulations. This examination is typically conducted by an independent third party, known as an auditor, who assesses the company's financial statements for any discrepancies or inaccuracies. The goal of an audit is to provide assurance to stakeholders, such as investors, creditors, and regulatory agencies, that the financial statements present a true and fair view of the company's financial position.

This process entails a thorough review of various financial documents, including the balance sheet, income statement, and cash flow statement. The auditor will verify the integrity of the information, evaluate internal controls, and ensure compliance with accounting principles. By conducting this detailed review, auditors play a crucial role in enhancing the credibility of financial reporting and fostering trust in the financial system.