Audit report
Audit Report
An audit report is an official document that presents the results of an audit. An audit is an examination of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions. It is done to ascertain the accuracy of financial statements provided by the organisation.
Types of Audit Reports[edit | edit source]
There are four types of audit reports. They are as follows:
- Unqualified Opinion (Clean Report): An unqualified opinion is a clean report. That is, the auditor did not find any misrepresentations during the audit.
- Qualified Opinion: A qualified opinion is given when the auditor encountered one of two types of situations which do not comply with generally accepted accounting principles, however the rest of the financial statements are fairly presented. This type of opinion is very similar to an unqualified or "clean opinion", but the report states that the financial statements are fairly presented with a certain exception which is otherwise misstated.
- Adverse Opinion: An adverse opinion is given when the auditor determines that the financial statements of an organization are materially misstated and, therefore, do not accurately reflect the company's financial performance.
- Disclaimer of Opinion: A disclaimer of opinion is issued when the auditor could not form, and consequently refuses to present, an opinion on the financial statements. This type of report is issued when the auditor tried to audit an entity but could not complete the work due to various reasons and does not issue an opinion.
Importance of Audit Reports[edit | edit source]
Audit reports are essential because they affect the company's perceived credibility. These reports are often used by investors, creditors, and other stakeholders to assess whether a company is a good investment.
See Also[edit | edit source]
References[edit | edit source]
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