In a standard audit, we painstakingly take the time to understand the client and what they do at a very deep level, from owner to employee. We want to know if the owner runs a tight ship or sloppy operation as far as internal controls. We set up procedures and budgets approved by the AICPA mentioned above, then we send out confirmations to banks, lawyers and even some purchasers of the clients products.  Only then do we go into the client's office and follow the documentation of many sample transactions from the beginning, such as when the sales invoice was created, to the end of the transaction, which is delivery of the product. We make sure that the money from the sale came into the company's bank account on each transaction by examining the bank statements, whether the revenue was in the form of cash, checks, credit cards or deferred into accounts receivable or installment payments.  We verify that the product sold in that transaction was purchased and inventoried properly. We physically count the inventory ourselves and verify that it is still current inventory, (not out-of-date items that should not be valued on the financial statement). We look at documents that prove that costs are recorded correctly for every aspect of the company, including delivery and/or shipping on that sample transaction. We even want to know that customers were satisfied with what they bought. We confirm to the bank or whomever is requiring the audit that the information is true and not made up or that the financial statement has expenses on it that should not be there. The actual procedures are much more intense than described here, but this gives a general idea of what an audit would do compared with the Review or Compilation explained on the next page of our site.