An annual audit is an independent examination of an organization's financial statements and accounting records. It is conducted by a qualified auditor or accounting firm to ensure that the organization's financial information is accurate, complete, and in compliance with applicable laws and regulations.

During an annual audit, the auditor will review the organization's financial statements and accounting records, test the internal controls that are in place to ensure accurate reporting, and verify the accuracy and completeness of the financial data presented. The auditor will also assess any risks or potential errors that could impact the financial statements and provide recommendations for improvements.

The purpose of an annual audit is to provide assurance to stakeholders, such as investors, creditors, and regulators, that the organization's financial statements are reliable and can be used to make informed decisions. It can also help identify potential fraud or other financial irregularities that may be occurring within the organization.

In many countries, annual audits are mandatory for certain types of organizations, such as public companies or nonprofit organizations that receive government funding. However, even if an annual audit is not legally required, it can still be a valuable tool for ensuring financial accountability and transparency.

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