Question

An auditor’s report is useful for financial analysis. What information is provided in the auditor’s report that is useful? Does the audit report offer any guarantees? Explain your answer. What do you think the general public believes the auditors are providing?

Answer 1

Explanation:

Auditors report is determined to be an opinion given by auditor on the financial statement of an organisation related to its financial statement presentation, accuracy of information, and implementation of standards issued by generally accepted accounting principles ( GAAP).

Usefullness of Audit report is

1.It provides information about financial position of an entity to its stakeholder that enhances their confidence in the entity.

2. It is provides information to investors regarding the capability to return money by the entity.

3. Auditor report helps the creditors to check the creditworthiness of an entity to lend goods on credit and set time limit of credit.

4. It gives useful information to the banking sector to land loans to the entity.

5. Auditors report gives useful information to the management to take key financial statergic decisions.

Auditors report is mainly nearly based on judgement of an auditor. It is prepared through the use of persuasive evidence rather than conclusive evidence. Auditor is not provided with all the information and he has to make judgement at certain places.
Therefore, auditors report is only auditor's opinion not a certificate.
So, it does not offer any guarantee to the stakeholders of an entity.