One of the most important points of the management of the company is the one that focuses on the audits. Since, this helps to keep track of the company that helps us detect failures, promote improvements for the development of the company. It is the actual state of the organization in general .Thus we can never deny the importance of an audit report.
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What is an Audit Report?
The audit report, also called the annual accounts audit report. It is the final document written by the auditors after the completion of the audit. Where they indicate the economic situation of the company and where they express their opinion on the economic reality of the company. This report is very important for all audiences, whether shareholders, financial entities or employees to know the real state of the company. ee the economic health and its viability. Check below the various types of an audit report.
What Comes in an Audit?
The auditor examines the processes and procedures by which your company prepared the financial information contained in your reports during the statutory audit. That is, the auditor must determine if the company’s financial reports have been prepared in accordance with generally accepted accounting principles or other applicable reporting frameworks.
Types
The objective of the auditor is to perform an examination on the annual accounts of the company to be able to assess them and extract a value judgment on their work. Audit reports can offer different opinions on the annual accounts of a company.
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Favorable Opinion
This means that the auditor agrees with the presentation of the annual accounts and the content of the financial statements. It is the most favorable opinion that can be obtained from an audit.
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Favorable Opinion with Qualifications
The report is also called qualified or qualified opinion. In this case the author is satisfied with the accounts offered by the company, but points out certain objections in some aspects of the company.
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Unfavorable Opinion
In this case the auditor indicates that he does not agree with the accounts and financial statements of the company. In his trial, the accounts do not show the economic reality of the company.
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Denied Opinion
It is also called “abstention of opinion. In these cases, the auditor states that he does not have sufficient resources to offer an assessment of the company’s annual accounts.
Structure of an Audit Report
The audit reports have a defined structure for the writing of the contents that must be included. This is where we find the familiar paragraphs of the audit report. The entities that have the obligation to undergo legal audits before being delivered to the Mercantile Registry must contain at least the following information:
Title or Identification:
It should be mentioned that it is an ‘Independent Auditor’s Report’.
Responsible for the Audit and Recipients:
It should be mentioned clearly as to whom the report is being given to.
Paragraph of Scope:
It describes the extent of the work carried out in the audit. The framework for the performance of the audit carried out will be delimited. So, indicating the audited financial statements and making reference to the Generally Accepted Auditing Standards (NAGA) used to perform the audit.
Legal or Comparative Paragraph:
It must be informed that the accounts are only for the last year. The annual accounts must include the balance sheet figures. The profit and loss account and the financing chart of the previous year.
Paragraph of Emphasis:
The auditor must indicate aspects that have been relevant to him. However, that have not affected the opinion that has been formed about the audit.
Paragraph of Qualifications:
The auditor will show if there is any objection to indicate about some kind of financial statement and explain the cause that caused it. These reservations do affect the opinion and may be due to some difference in the interpretation of different issues.
Paragraph of Opinion:
This is where the auditor will show his own judgment about the accounts he is auditing. We will find in this paragraph an evaluative judgment on the financial situation. Also, the patrimony and the results of the operations and the obtained or applied resources. It will also assess if you have the necessary situation to be able to offer a real valuation of the accounts.
Paragraph on “Other Issues”:
Although this paragraph is not mandatory. However, the auditors may use other paragraphs to add the information on certain circumstances. If that is necessary to complete the report on the audit.
Paragraph on the Management Report:
This part of the report will show the performance of the management. Also it will take help from the annual accounts of the company or if on the contrary there is something that does not make it different.
Auditor’s Signature:
The engagement partner or auditor shall sign the audit report.
Place of Signature:
The city in which audit report is signed.
Report Date:
Date on which the audit report is signed.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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