August 6, 2025

Today, we’re going to talk about a topic I have no practical experience in, but like a true consultant, I know enough to give a bird’s-eye view and hit the talking points: Audit.

Auditing, along with tax, is how these massive firms got their start, long before consulting was even a thing.

The Basics

Auditing at its most basic level is the independent and objective verification of a firm’s financial position or the operational processes they are following.

In simple terms, it’s about verifying that something happened as it should have, like specific regulations were followed or that the financial statements were produced correctly.

Why Audit?

If your company is of any material size, people like investors, shareholders, partners, stakeholders, and customers often need verification that your finances are what you say they are.

They also need assurance that you’re following rules and regulations to make sure you’re a company in good standing.

Often, an audit isn’t just a good idea—it’s required by a government entity or regulator for a company to operate at a certain size.

The Auditor’s Role

This is where auditors come in. Their job is to make sure a company is following certain rules, that its finances are in order, and then to provide the firm’s sign-off.

This official sign-off confirms that the financial statements are correct and the required rules are being followed.

Mandatory Independence

A very important—and non-negotiable—consideration of auditing is independence.

A key component of an audit is that it must come from a neutral third party who can provide an unbiased perspective.

Regulators like the SEC and the PCAOB mandate that an auditor is independent from their clients.

This means an auditor can’t hold stock or have any other financial interest in a company they are auditing, as that would be a clear conflict of interest.

Ensuring Neutrality

To enforce this, many of these large firms have a significant internal function that monitors and tracks their own employee finances.

This ensures that anyone auditing a client is completely free of a conflict and can maintain their independent, unbiased viewpoint.

Conclusion

To sum it up, an audit is an outside verification that finances are correct, and/or certain rules are being followed, and that the proper controls are in place.

What else do you want to know about consulting? 

Send me a DM or read more of my articles on my blog by clicking here.