Audit:

The audit is defined as a systematic examination of books of accounts of an individual or an organization. Auditing is done by the professional CPA; we call them auditors. At the end of the accounting period when all the books of accounts are closed, an auditor ensures all the entries recorded in the books of accounts are accurate as required in the

Misstatement can occur whether intentionally and unintentionally. Management intentionally can understate or overstate their cash and investment accounts. The most common possible misstatement is likely with the account cash and trading and available-for-sale securities. The management can overstate their cash (assets), investment and unrealized gain on sale of the securities account to make a false impression to the outsiders (investor). Because overstated gain overstates the net profit and the overstated investment and cash (assets) overstated the balance sheet.