Scribd
Upload
14 views

Untitled Presentation

The document discusses the meaning, objectives, components, and types of audit reports. An audit report provides the auditor's opinion on a company's financial statements and whether they comply with accounting standards and are free from material misstatements. The report usually consists of three paragraphs stating responsibilities, scope, and opinion. Common report types include clean, qualified, adverse, and disclaimer of opinion.

Uploaded by

QUDSIA FATIMA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
14 views

Untitled Presentation

The document discusses the meaning, objectives, components, and types of audit reports. An audit report provides the auditor's opinion on a company's financial statements and whether they comply with accounting standards and are free from material misstatements. The report usually consists of three paragraphs stating responsibilities, scope, and opinion. Common report types include clean, qualified, adverse, and disclaimer of opinion.

Uploaded by

QUDSIA FATIMA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 8

Audit Report

Meaning, objectives and effectiveness of Audit report


Meaning of Audit Report

Audit report is a document containing the opinion of auditor on company,that


whether company's financial statements fully comply with accounting principles
and free from material misstatements.
Objectives of Audit Report
The objective of an audit is to form an independent opinion on the financial statements of the
audited entity. The opinion includes whether the financial statements show a true and fair view,
and have been properly prepared in accordance with accounting standards.
The Aim of auditor report is to have reasonable assurance to company that its financial
statements are free from fraud and error.
The audit report is important because banks, creditors, and regulators require an audit of a
company's financial statements.
Components of Auditor report

A report usually consists of three paragraphs.

•The first paragraph states the responsibilities of the auditor and directors.

•The second paragraph contains the scope, stating that a set of standard
accounting practices was the guide.

•The third paragraph contains the Auditor's opinion.


Types of Report Issued by a Company
The type of report issued will be dependent on the findings by the auditor. Below are the most
common types of reports issued for companies:

Clean or Unqualified Report

A clean report means that the company's financial records are free from material misstatement.

Qualified Opinion

Qualified opinion is issued in the following two conditions:

•first, if the financial statements contains material misstatements that are not pervasive;

•second, if the auditor is unable to obtain sufficient appropriate audit evidence on which to base
an opinion, but the possible effects of any material misstatements are not pervasive.

For example, a mistake might have been made in calculating operating expenses or profit.
Adverse Opinion
An adverse opinion means that the auditor has obtained sufficient audit evidence and
concludes that misstatements in the financial statements are both material and
pervasive. An adverse opinion is the worst possible outcome for a company and can
have a lasting impact.
Disclaimer of Opinion
A disclaimer of opinion means that, for some reason, the auditor is unable to obtain
sufficient audit evidence on which to base the opinion, and the possible effects on the
financial statements of undetected misstatements, if any, could be both material and
pervasive.
For example Auditor was not allowed access to certain financial statements.
Effectiveness of Audit Report
In particular to make an audit report effective he auditor should evaluate whether:
• the financial statements adequately disclose the significant accounting
policies.
•the accounting policies selected are consistently applied and
appropriate.
• accounting estimates are reasonable.
• information is relevant, reliable, comparable and understandable.
• the financial statements provide adequate disclosures to enable the
users to understand the effects of material transactions and events.
the terminology used is appropriate.
Thank You

You might also like