AUD Audit Reports

Main Idea : Audit Reports

Sub Ideas :

The definition and the importance of Audit reports

• Types of audit reports
• standard unqualified audit report
• Unqualified Audit report with explanatory

paragraph - Materiality

Definition of Audit Reports

An audit report is a written opinion of an auditor regarding whether an entity's financial statements present fairly its financial position.

Written in a standard form

The audit report is the final step in the entire audit process.

Why Reports are essential to Audit?

1. They communicate the auditor´s findings
2. users of financial statements rely on the auditor´s report to provide assurance on the financial statements.
3. the Audit report is the final step in the entire audit process, and the auditor will likely be held resonsible if an incorrect audit report is issued.

Uses

An audit report comes in handy in many financial situations. The report is essentially the same as a job reference. It takes the research and findings of a trained financial specialist and uses them to verify that your financial reputation and future is secure. The audit report then serves as a good word to creditors, banks and any other financial institution that may need to investigate your financial history and stability. A clean audit report can help when getting a loan or line of credit.

The four types of audit reports are :

1. Unqualified
2. Qualified
3. Disclaimer
4. Adverse

Consequences of Audit reports:

A standard audit report usually means that auditors have issued a non-qualified opinion regarding a company’s financial information. This allows the business to seek outside investment for future operations.

Qualified or adverse audit opinions will subject the company to further audits, causing negative goodwill toward outside stakeholders. Companies may also face regulatory fines from government agencies if they misled the public about the company’s financial health.

Paragraphs of a Report

For the sake of consistency and simplicity, each type of audit report follows a specific style and organization.

An unqualified report is a three-paragraph report. The introduction paragraph outlines the general purpose of an audit report and gives the legal meanings of the report without being specific to the company or person being reported on. The scope paragraph then describes the nature and process of the audit and makes clear that the financial statements are verified and acceptably reported on. In the final paragraph, the auditor gives his opinion on the findings that lead to his rating.

Each of the other types of audit reports follow this same format; however, they add a fourth paragraph where the auditor further expounds on why a favorable rating couldn't be given, citing facts from the audit process