What is ‘audit’
The audit is a step-by-step record by which Accounting data or trade can be traced back to its source. Audits are used to verify and track various types of transactions from accounting entries for transactions in brokerage accounts. Audit is often used, when the accuracy of the element must be checked. Audits can be useful in determining the validity of the account, source of funds or trade.
Breaking down the ‘audit’
The audit can be used in accounting, when the examiner needs to check the metrics, such as revenues, net income or earnings per share. Transactions that are involved in computing the company’s income, examining the net income or earnings per share. For example, the cost of goods sold is the expenses are subtracted from gross revenues when calculating net profit. Cost of goods sold, the rate would have been double-checked by verifying operations and the data sources that went into the calculation of cost of goods sold. All elements of the final figures will be double-checked by the audit to make sure the final figure.
When buying a home, a mortgage lender can use auditing to determine the source of funds for down payment. They may be asked to show a Bank statement indicating the transfer of funds to the account and request an additional check against the original Deposit.
The sec and NYSE will use the audit for the explicit reconstruction of trades when there are questions as to the validity and accuracy of data.
The audit can also be used to track improper market activity. For example, if it is believed that a particular person is trading large volumes of thinly traded stocks with the purpose of manipulating stock prices, the regulator can use the audit to identify the culprit. The regulator can document and analyze all houses and brokers involved in specific trades for the security to offend, to determine which activity is abnormal and who can be manipulative.