What does "audit" actually mean and what's so important about auditing?
The CPA firm provides auditing services to validate the fair presentation of a Company's Financial Statements. These are the services that the SEC is concerned with. While the CPA is retained and paid by the Company, its duty as auditor is to provide reasonable assurance to third party users of the Company's financial statements that in fact the financial statements prepared by the Company provide an accurate snapshot of the Company’s financial condition. The CPA's role as an auditor requires a CPA firm to be independent and provide the attest function on these financial statements. To do this it must perform certain procedures, which includes independent verification and testing.