Audit (Financial Audit)
An independent examination of a company's financial statements to verify their accuracy and compliance with accounting standards.
What is Financial Audit?
A financial audit is an independent, objective examination of a company's financial statements and underlying records conducted by a certified public accounting firm to assess whether the statements present fairly, in all material respects, the company's financial position in accordance with GAAP or IFRS. The external auditor examines evidence, tests internal controls, and issues an opinion — typically an unqualified (clean) opinion, a qualified opinion, a disclaimer, or an adverse opinion. Public companies in the US are required to have their annual financial statements audited by an independent registered public accounting firm, as required by the Securities Exchange Act and enforced by the SEC. The audit opinion is published in the annual report alongside the financial statements.
Example
PricewaterhouseCoopers issued an unqualified audit opinion on Apple's FY2024 financial statements, stating that the consolidated balance sheet, income statement, and cash flow statement present fairly in all material respects in accordance with US GAAP — the standard clean bill of financial health that investors expect.
Source: Investopedia — Audit