audit

1. An examination of an organization's financial documents in order to determine whether the records and reports are valid and the information is fairly presented. An independent audit is usually conducted by a certified public accountant who then issues an opinion as to whether the statements accurately and fairly represent the firm's operations and financial position. See also external audit, internal audit.
2. An IRS or other tax agency examination to verify the accuracy of a corporate or individual tax return. An audit may take place at the taxpayer's place of business, at an agency office, or via correspondence. The burden of proof during an audit is on the taxpayer, who is often required to supply proof of deductions, expenses, and other items included in a tax return. Also called tax audit.