Audit is a corporate governance practice that is conducted to put a check on an entity. It is the thorough examination of complete books of accounts, transactions entered into by the company, physical inspection of inventories, etc. to make sure all the departments within the organization follow the standards and systems to operate.
Audit is conducted by professionals who have expertise in relevant areas depending upon the category of the audit. Every public listed entity must get its accounts audited by an independent auditor before the declaration of result of any quarter. The first auditor of the company is appointed by the board of directors within 30 days of the incorporation date and shall hold the office until the conclusion of the first AGM. Removal of an auditor is classified into two categories – before or after the expiry of the tenure of the auditor. The process to remove the auditor is governed under the Companies Act.