Elements of Audit Report
Featuers or Characteristics of Audit Report
Meaning of Audit Report
Audit report is a statement on financial position of the company which is issued after the conclusion of audit. It is a medium through which an auditor expresses his opinion on the financial statements under audit. It generally shows the nature and scope of audit conducted by the auditor and his opinion on the final accounts of the company. It is an important part of audit because it provides the results of the audit conducted by the auditor. The audit report is the final and ultimate report of audit process.
Features of an Audit Report
The
following are the characteristics of an ideal or a good audit report:
(i)
It should be in a simple language, which can be understood easily. (ii) It
should be divided into separate paragraphs.
(iii)
The audit report must bear date on it.
(iv)
It should be addressed to them for whom it is. written, as
(a)
Audit report of a company should be addressed to the shareholders.
(b)
In case of special audit, the report should be addressed to the Central
Government.
(v)
The report should be fully clear, not illusory.
(vi)
It should be impartial.
(vii)
The auditor should write it in his office only.
(viii)
It must be brief but no fact should be left out.
(ix)
At the end of the report, the auditor should put his signature on the
right-side. He should write 'Chartered Account' below the signatures.
Elements of Audit Report or Essentials of Good Audit Report
1. Title: An auditor report must have appropriate title, such as "Auditor's Report". It is helpful for
the reader to identify the auditor's report. It is easy to distinguish it from
other reports. The management can issue any report about the business
performance. The title of the report is essential.
2. Addressee: The addressee may be shareholder or board of director of a
company. The auditor can audit financial statements of any business unit as per
agreement. The report should be appropriately addressed as required by
engagement letter and legal requirements. The report is usually addresses to
the shareholders or the board of directors.
3. Date of Report: The report should be dated. It informs the reader that the
auditor considered the effect on the financial statements and in his report of
events or transactions about which he become aware the occurred up to that
date.
4. Identification: The audit report should identify the financial statement
that have audited. The financial statement may include trading profit and loss
accounts, balance sheet and statement of changes in financial position and
sources and application of frauds statement. The report should include the name
of the entity. Moreover, the data and period covered by the financial statement
are also stated in it.
5. Reference to
Auditing Standards: The audit report should
indicate the auditing standard or practice followed in conducting the audit.
The international auditing guidelines need assurance that the audit has been
conducted as per set standards.
6. Opinion: The auditor's report should clearly state the auditor's
opinion on the presentation in the financial statement of the entity's
financial position and the result of its operations. The statement give a true
and fair view is an auditor's opinion. This opinion is usually based on
national standard or international accounting standards.
7. Signature: The audit report should be signed in the name of the audit firm, the
personal name of the auditor or both as appropriate.
8. Auditor's Address: The address of auditor is stated in the audit report. The
name of city is stated in the report for information of the readers.
Also Read: Auditing Important Topics
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