What is Audit

Audit is an independent examination of a financial information of any entity, whether profit oriented or not, irrespective of it's size and legal form, when such examination is conducted with a view to expressing an opinion thereon (as defined by the Institute of Chartered Accountants of India). In simple terms, Audit is a check on entities by the Government in regard to their Financial Statement.

Financial Statement is a statement that provides necessary financial information/state about/of the company as on the date mentioned.
The Financial Statement includes:
1) ‌Balance Sheet
2) ‌Profit and Loss Statement
3) ‌Cashflow Statement
4) ‌Notes to Accounts
5) ‌Statement of changes in Equity

The above are the components of a Financial Statements that enable the users of such to make a decision.
Audit is a verification of transactions and events of an entity which lead to the creation of such Financial Statements.
All the transactions and events of an entity cannot be verified/checked, so Auditors use Sampling techniques to Audit an entity's Financial information. Sampling takes transactions of each type from each set of group as a representative of such type and/or group and applying of Audit procedures on the sample collected as a whole.

Audit Procedure:
Audit procedure is a way of checking an event or a transaction or both. It consists of two components:
1) ‌Checking the Internal control of the entity for a set/group of transactions as to know the validity of the transaction.
2) ‌Verifying with the primary documents of a transaction as to whether the information shown in the Financial Statements are true in all necessary terms.