What does the term "audit" refer to in tax practice?

The term "audit" in tax practice primarily refers to an evaluation of a taxpayer's financial accounts. This process typically involves a thorough examination of an individual or business's financial records and tax returns by revenue authorities to ensure compliance with tax laws and to verify the accuracy of the reported income, deductions, and credits.

During an audit, auditors may assess various financial documents, including bank statements, receipts, invoices, and other relevant records to ensure that the reported information aligns with the supporting documents. This can help the tax authorities identify discrepancies or areas of non-compliance.

In contrast, the other choices do not accurately define what an audit is. A request for additional deductions, while possibly related to the audit process, does not encapsulate the meaning or purpose of an audit itself. Similarly, a standard tax filing procedure refers to the processes taxpayers follow in submitting their returns, which is distinct from an audit. Lastly, a method to reduce tax liabilities could pertain to tax planning strategies, but again does not capture the essence of an audit, which is primarily investigative in nature.