Audit Reports

Audit Reports

Objectives of the presentation

• Learn the definition and the importance of Audit Report and recognize the difference between it and a review report.
• know the different types of audit reports
• Focus on understanding Unqualified audit reports.

What is a Review Report?

• A review report is a "limited assurance" report that a certified public accountant (CPA) issues at the end of a review. In a review process, an auditor ensures that financial statements are fair, complete and in compliance with generally accepted accounting principles (GAAP).
• However, an external auditor does not test financial statement accounts or internal controls to detect significant errors, control weaknesses or problems in financial reporting mechanisms. "Limited assurance" means that an audit specialist is not aware of any important problem in accounting records but has not conducted any test to confirm that opinion.

Why Reports are essential to Audit?

• They communicate the auditor's findings
• users of financial statements rely on the auditor´s report to provide assurance on the financial statements.
• the Audit report is the final step in the entire audit process, and the auditor will likely be held responsible 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.

Unqualified Opinion

An unqualified report is a clean bill of health that reassures investors and shareholders about a company's financial soundness. The report indicates to the public that the company's financial statements are in line with accounting rules. In other words, the auditor has no reservations concerning the accounting reports.