What is Audit Report Characteristics of Audit Report Types of Audit Report?

Introduction An audit is appointed to examine the accounting and other records of the organization and to express his independent opinion as to truth and fairness of financial statements. The document through which an auditor expresses his opinion is called ‘’Audit Report”. The audit is responsible under section 255(3) of the company ordinance 1984 to make report to board of directors or the members of the company. 

                                      

Definition of Audit Report ‘’ Audit report should contains a clear indication of the auditor’s examination If any and the degree of responsibility he is taking’’. (J.C. Roy) Characteristics of audit report Final Stage Audit report is the final stage in the audit process. It is and end product of every audit. Written Statement Audit report is a written statement of facts collected from the books and accounting records. Means of Communication Audit report is the means by which the auditor formally communicates the results of his audit work the shareholders of the company. No Guarantee Audit report does not provide guarantee of the correctness of books off account and financial statements examined by auditor, it is an expression of auditor’s opinion on the financial statements of the organization. Audit Responsibility Auditor’s report is a valuable document in which the auditor gives his independent opinion as regards the financial position of the company’s business. Important Part Audit report is an important part of audit process. It summarizes the results of the examination work conducted by the auditor.

 Addressee The audit report may be addressed to shareholders or board of direcrtors But it is generally addressed to shareholders. Identification The audit report should identify the financial statements the have been audited. The financial statement may include. 1. Profit or loss account or income statement 2. Balance sheet 3. Cash flow statement 4. Statement change in financial statement Types of Audit Report 1. Unqualified Opinion 2. Qualified Opinion 3. Adverse or Negative Opinion 4. Disclaimer Unqualified Opinion Literally "unqualified" means without restrictions. Unqualified opinion means that the auditor is satisfied in all respects on various financial matters of the meant organization. When the auditor gives an unqualified or open opinion, he has no reservation on the accounts and financial statements of the organization Unqualified or clean opinion is without qualification (restrictions or limitation or reservations.

                                    

 The clean or unqualified opinion is expressed in a positive manner. It involves that the accounts and financial statements present a true and fair view of business affairs. Qualified Opinion When the auditor expresses his opinion subject to certain observations o qualifications (restrictions), it is called qualified opinion. When the auditor gives qualified opinion, he is not satisfied with the books of account another records. He believes that the overall financial statements are not fairly stated. He should also give all reasons for his qualification. Reference should also be given about non-compliance with relevant laws and other requirements. Adverse or Negative Opinion When there is reasonable ground to form an opinion that the books accounts and financial statements taken as a whole do not present a try and fair view of the financial position of the company, the auditor give adverse or negative opinion. 

When an auditor gives adverse opinion, he discloses all reasons on which he has made adverse opinion. Disclaimer Literally disclaim means "know nothing about". When for want of sufficient information, the auditor is unable to form an opinion on the fairness of financial statements, he may disclaim in opinion. The auditor may state that he is unable to form an opinion on fairness of financial statements for want of sufficient and appropriate evidence to express an opinion when there is disclaimer of opinion the reasons for it must be given in each case.