An independent examination of, and the subsequent expression of opinion on, the financial statements of an organization. This involves the auditor in collecting evidence by means of compliance tests (te_st s of control) and substantive tests (tests of detail). External audits (i.e. audits performed by an auditor external to the organization) an, required under statute for limited companies by the Companies Act and for various other undertakings, such as housing associations and building societies. by other acts of parliament. Internal audits are per formed by auditors within an organization, usually an independent department. such as an internal audit department. Internal auditors examine various areas, including financial and non-financial concerns. with emphasis on ensuring that internal controls are working effectively. Internal auditors may assist the external auditor of an organization. Non-statutory audits can be performed at the request of the owners. members. or trustees of an undertaking, for example. Forms of *financial statements, other than the annual accounts, may also be audited; for example, summaries of sales made or stocks held by an organization in a specified period. See also
STATUTORY AUDIT; AUDITORS’ REPORT; INTERNAL AUDIT.