Auditing is a systematic process of objectively obtaining and evaluating evidence assertions about economic actions and events to ascertain of correspondence between those assertions and established criteria and communicating the results to interested users. An audit report is a written opinion of an auditor regarding an entity’s financial statements.
The main objective of an audit is to enable an auditor to report to the members of the company with regard to the truth and fairness of the financial statements and other records of the company.
Different types of Audit Report –
There are four basic kinds of report can be included in auditor’s report.
(a) Unqualified Opinion – Often called a clean opinion an unqualified opinion is an audit report that is issued when an auditor determines that each of the financial records provided by the business is free of any misrepresents. In addition, an unqualified opinion indicates that known as generally accepted accounting principles. This is the best type of report a business can receive.
(b) Qualified Opinion – In situations when a company’s financial records have not been maintained in accordance with GAAP but no misrepresentations are identified an auditor will issue a qualified opinion. A qualified opinion, however, will not include an additional paragraph that highlights the reason why the audit report is not unqualified.
(c) Adverse Opinion – The won’t type of financial report that can be issued to a business is an adverse opinion. This indicates that the firm’s financial records do not conform to GAAP. In addition, the financial records provided by the business have been grossly misrepresented. Although this may occur by error, it is often an indication of fraud. When this type of report is issued, a company must correct its financial statement.
(d) Disclaimer of Opinion – On some occasions, an auditor is unable to complete an accurate audit report. This may occur for a variety of reasons such as an absence of appropriate financial records.
