Contents or Elements of Auditor’s Report
The report of a certified auditor or auditors stating the accuracy of financial statements of a public limited company is known as auditor’s report. This report is a written letter from the auditor containing the view of whether a company’s financial statements observe with generally accepted accounting principles (GAAP).
The content of an Auditor’s Report needs to be clear and accurate, providing enough verification to validate the auditor’s estimation. The auditor’s report should incorporate the following elements:
The auditor’s report should contain a heading as styled “Auditor’s Report.”
Every auditor’s report must address the recipients or readers of the report. State the party, such as the limited management or shareholders, to whom the report is addressed. For example in the case of a company auditor’s report is addressed to the members of the company.
- Introductory Paragraph
In the introductory paragraph, the names of the financial statements audited should be provided. This generally includes the profit and loss account, balance sheet, cash flow statement, statement of changes in equity and other accommodating books that were used in the preparation of financial reports.
- Identification of the financial statements audited:
In the report, the auditors should specify the name of financial statements audited by them during the financial year. They generally audit profit and loss statements, balance sheets, cash flow statements, and ounces equity statements. All other supportive books of accounts are also within the purview of their audit.
- Management Responsibilities:
After Addressee the liability towards the financial statement is to be written which includes the responsibility of management towards the research and arrangement of financial statements.
- Auditor’s Responsibility:
After management responsibility auditor’s liability is to be written which includes their accountability to matter an impartial estimation on the financial statements.
- A reference to the auditing standards and practices followed:
The auditors follow certain generally accepted accounting standards. Here they specify the standards followed by them in auditing. In this section, the Auditor clearly mentions that it is the accountability of the administration or board to organize the financial statements and preserve internal controls.
- Expression of opinion on the financial statements:
On the basis of the fact of the audit, report opinion is to be stated. They must give a declaration stating whether the statements and books of accounts represent a true and fair view of company affairs. Then the auditor is essential to write his own audit report opinion on the reality and sprite of the financial statements specifying the foundation of such opinion.
At the end of the report, they need to put their signature. Example – The signature is to be done by the appointment collaborator of the audit firm and below that the name of the appointment partner and the audit firm is to be written.
- Auditor’s address:
The full name and address of the audit firm are to be mentioned in the report.
- The date of the report:
Every report must mention the date on which it was prepared and submitted.