Unit 10 Reading Activity

Listen to the recording as you read the text. Then complete the activities.


There are few words for an accountant, which cause as much concern as the word ‘audit’. Audits, whether internal or external, carefully study the accountants work and identify any errors or abnormalities.

In large firms audits are often used as a control for the work of the accounting department, in these firms the accounts departments may deal with millions of dollars a month and without a control process in place there would be no way of verifying that the information produced was correct and that the company wasn’t being defrauded.

These internal audits can take one of two forms, either being carried out by the CFO and his team or by a specially commissioned external firm of auditors. The second option is by far the most popular as it ensures objectivity in the audit.

In either of these forms, the auditors are responsible for confirming the validity of the records produced by the accounting department. This can be done by cross-checking the accounts workings with the source information, although in larger firms this can be too time consuming. In these cases statistical sampling, in which a random sample is checked can provided reasonable proof of accuracy.

These audits may be financial or managerial in nature, in that they can confirm the workings of the financial accounts or of management accounts.

The primary function of these audits is to demonstrate that the company is following all expected standards whether they be accounting or production. Each department can be audited to confirm that they adhere to set procedures and to ascertain that each process is as described.


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