What Is an Audit and the Main Audit Standards

Audit is a fundamental pillar of modern business and financial management. It is the process of independently, objectively, and systematically evaluating an organization’s financial statements, operations, and internal control systems. Based on the evidence they obtain, auditors form a reliable opinion on the accuracy and fairness of the financial statements. Beyond enhancing corporate transparency, audit strengthens the confidence of stakeholders — investors, government bodies, and other users of financial information.

What Is an Audit?

The word audit originates from the Latin term “audire” (to hear), and in modern accounting it refers to the professional and independent assessment of an organization’s financial and operational indicators. This assessment focuses on the truthfulness, legality, and compliance of financial statements with applicable standards.

Types of Audit

In practice, auditing is applied in various forms and is mainly divided into the following categories:

1. Financial Audit

Evaluates whether financial statements comply with international and national accounting standards.

2. Operational Audit

Assesses the efficiency and effectiveness of internal processes.

3. Compliance Audit

Checks adherence to laws, regulations, and internal policies.

4. IT Audit

Evaluates the security, reliability, and functionality of information systems.

Main Audit Standards

To ensure the quality of audit activities, both international and national standards have been established.

International Standards on Auditing (ISA / BAS)

The International Standards on Auditing (ISA), issued by the International Auditing and Assurance Standards Board (IAASB), regulate auditors' work from both methodological and ethical perspectives. They cover principles such as:

• Audit planning and execution

• Collection and evaluation of audit evidence

• Risk assessment

• Preparation and presentation of audit reports

For example:

• ISA 200 – Overall objectives of the independent auditor

• ISA 300 – Planning the audit

• ISA 500 – Audit evidence

National Audit Standards

In the Republic of Azerbaijan, audit activity is regulated by the Law “On Audit Service” and the International Standards on Auditing (ISA). These standards are adapted to international best practices while taking national specifics into account.

Ethical Standards

Auditors must adhere to strict ethical principles such as:

• Independence

• Objectivity

• Professional behavior

• Confidentiality

These principles ensure trust and professionalism throughout the audit process.

Stages of an Audit

Audit procedures generally consist of the following key stages:

1. Planning

The auditor analyzes the organization’s activities and risk factors, developing an appropriate audit plan.

2. Collection of Evidence

Information is gathered through documents, contracts, inquiries, and observations.

3. Evaluation

Collected evidence is analyzed, and related risks or irregularities are identified.

4. Reporting

The auditor issues an audit opinion and presents it to the client and relevant stakeholders.

Audit and Business

Audit not only ensures financial transparency but also contributes to risk mitigation and improved management practices. With effective auditing, entrepreneurs and investors can make better decisions, while government authorities gain stronger control over the implementation of laws.

Audit is a guarantee of trust, transparency, and accountability in the modern economic system. Compliance with international and national audit standards enhances audit quality and supports sustainable business development.