Definition:
In a general sense, an audit is an independent analysis of an entity's accounting documents and general financial situation. In business, audits are conducted by either an in-house independent agent or a third-party accounting firm in order to determine the veracity of the balance sheet and any claims made in annual reports, and to ensure generally accepted accounting principles (GAAP) are followed. In personal finance, the IRS can audit your tax return in order to determine the accuracy and completeness of your income information, such as wage levels, deductions, capital gains, etc.
