The Audit Report: To Know The Financial Condition of A business
If you want to prepare an audit report, you have to gather the data of the finance of a company, the data of the assets. Professional independent accounting auditors will assess the story. It describes your company’s financial status and the assets it has. Moreover, it also presents the eligibility of a company to the accounting firms.
Auditor Write An Audit Report
When an auditor provides you an audit report, s/he will state the financial conditions of your company into three paragraphs. Each paragraph contains different issues. The first paragraph is about the responsibilities of an auditor and the entity management as well.
The second paragraph describes the scope of the financial audit, while the third paragraph is about the opinion of the auditor and the financial statements.
1. Types of audit report
In the accounting field, there are four kinds of this report. They are:
- The unqualified opinion of the audit report is established when a company or business is free from the misrepresentations. It tells the readers that the company meets the standards of Generally Accepted Accounting Principles (GAAP).
- The qualified opinion of the audit report is when a company doesn’t meet the standards of GAAP, but there are not any misrepresentations found by the auditors.
- The adverse opinion of the audit report is when the auditors find the gross misrepresentations in a company. Moreover, it will be established when the company doesn’t meet the standards of GAAP as well.
- Disclaimer of the opinion of the audit report is when the auditors could not complete an audit report: inappropriate financial records that a company provides can be the cause.
2. The components that should be in an audit report
The report is divided into several parts.
- The title of the audit report is mentioned on the first page.
- The report also describes the addressee which the news is
- There is a section of management’s responsibility to state the financial statements as well as the description of auditor’s responsibility
- There will be the opinion of the auditor and the basis of it
- The place of signature and the signature of the auditor are a must in the report as well as the date.
The audit report is a necessary document provided by the companies since they have to meet the law regulations and standards in operating their business.