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An audit is the highest level of assurance that financial statements present fairly the entity’s financial position, results of operations and cash flows in accordance with U.S. generally accepted accounting principles or another basis of accounting. In an audit, the CPA must be independent of the client and the financial statements must contain all required disclosures.
An audit is appropriate for businesses that must offer a higher level of assurance to outside parties. The financial statements will be examined, accounts will be confirmed with third parties, physical inspections and observations will be conducted, and testing will be performed on selected transactions through the review of supporting documents.
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