What is a financial audit?

A financial audit is an examination of a company's financial records and transactions to ensure that they are accurate, complete, and comply with relevant accounting standards and laws. The purpose of a financial audit is to provide assurance to stakeholders, such as investors, creditors, and regulators, that the company's financial statements are reliable and can be trusted.

During the audit process, certified public accountants (CPAs) will review a company's financial statements and supporting documents, such as bank statements, receipts, and invoices. They will also assess the company's internal controls and accounting policies to identify any potential risks or areas of concern.

At the conclusion of the audit, the CPA will issue a report stating their opinion on the accuracy and completeness of the financial statements. If no material discrepancies or issues are found, the CPA will issue an unqualified opinion, which indicates that the financial statements are fairly presented in all material respects.

If the CPA identifies significant errors or issues with the financial statements, they may issue a qualified opinion, which indicates that there are certain limitations to the accuracy and completeness of the statements. In extreme cases, they may issue an adverse opinion or a disclaimer of opinion, which indicate that they were unable to provide an opinion due to significant deficiencies in the company's financial reporting.