An audit is an independent, external examination of a business's financial statements and the records behind them, carried out by a registered auditor. It concludes with an opinion on whether the statements fairly present the business's financial position and results, in accordance with the applicable accounting standards.
What it means
The auditor tests transactions and balances, confirms evidence, and assesses whether internal controls support reliable reporting. Certain entities, by size or public-interest score, are legally required to be audited rather than merely reviewed.
Where it fits in
Payroll is a routine focus area for auditors because of its size and fraud risk - auditors typically test that employees exist, are paid the correct amount, and that statutory deductions and submissions (PAYE, UIF, SDL) are accurate and complete.
Key rules
- An independent examination concluding in an opinion on the financial statements.
- Tests transactions, balances and internal controls.
- Required by law for certain entities based on size or public interest.
- Payroll is a routine high-risk area auditors test in detail.
