Layout Versus Schematic

The Layout Versus Schematic (LVS) is the class of electronic design automation (EDA) verification software that determines whether a particular integrated circuit layout corresponds to the original schematic or circuit diagram of the design.
Background.
A successful design rule check (DRC) ensures that the layout conforms to the rules designed/required for faultless fabrication. However, it does not guarantee if it really represents the circuit you desire to fabricate. This is where an LVS check is used.
The need for such programs was recognized relatively early in the history of ICs, and programs to perform this comparison were written as early as 1975. These early programs operated mainly on the level of graph isomorphism, checking whether the schematic and layout were indeed identical. With the advent of digital logic, this was too restrictive, since exactly the same function can be implemented in many different (and non-isomorphic) ways. Therefore, LVS has been augmented by formal equivalence checking, which checks whether two circuits perform exactly the same function without demanding isomorphism. 
Check.
LVS checking software recognizes the drawn shapes of the layout that represent the electrical components of the circuit, as well as the connections between them. This netlist is compared by the "LVS" software against a similar schematic or circuit diagram's netlist.
LVS checking involves following three steps:
In most cases the layout will not pass LVS the first time requiring the layout engineer to examine the LVS software's reports and make changes to the layout. Typical errors encountered during LVS include: