An examination and verification of the financial records of the association. Depending upon the size of the organization, an _____ may be required by federal or state law. The size of the organization also determines whether the _____ can be done by an internal group, usually referred to as the _____ committee, or an external, independent auditor.

• A. Audit
• B. Budget
• C. Audit Committee
• D. Ledger review

Answer: (A)

Auditing is the formal examination and verification of an association’s financial records. Some federal or state laws require an audit, and this requirement often depends on the organization’s size. The size also determines who conducts the audit: it can be done by an internal group, typically overseen by an audit committee, or by an external, independent auditor. The purpose is to provide assurance that the records are accurate and compliant, with larger organizations typically needing the independence of an external auditor, while smaller ones may rely on internal oversight.