Learn in the textbookCorporate Governance and Disclosure
DefinitionAn audit (監査) is an activity in which someone in an independent position from the subject examines whether accounting or operations follow laws and standards and then expresses an opinion on the results.
ExplanationBecause the check is made by someone with no stake in the party being examined, the disclosed information becomes trustworthy. Depending on what is examined, there are, for example, audits of accounting, audits of directors' duties and audits of information systems. When auditors find a problem, they point it out or recommend improvements.
AnalogyIt is like a scorekeeper in a sports match who belongs to neither team. Because the record comes from someone who is not involved, both teams and the spectators can trust the result.
Memory hookTo audit is to look over someone else's work. Whoever does the looking must not be on the side being looked at.