Question

1a. What are the different types of audit opinion? –Discuss

1b. What is auditing? Discuss. Can we state and discuss the three types of audits and how auditing delivers values to business and society?

Answer 1

1. There are four types of opinions

a.Unqualified opinion

this opinion is given only when the financial statement of a company give true and fair view without any discretion and it indicates that the company's financial report is clean.Further it also states that the financial report is free from any misstatements

b. Qualified opinion

This opinion states that financial reports are fairly stated except few issues.

c. Disclaimer opinion

This opinion is given when an auditor is unable to express a definite opinion.This might be due to lack of sufficient and appropriate audit evidence given by the company.

d. Adverse opinion

This opinion is given when tge auditor finds that the financial reports are grossly misstated ,when there is possibility of fraud and when the company has not followed GAAP principles.

1b. Auditing refers to the art of inspection of books of accounts and other financial reports independently by a qualified Chartered Accountant.This is done to ensure the statutory compliance required by the entity.An audited financial reports gives an assertion to the stakeholders that the financial reports represent true and fair view without any misstatements.

Three types audit

i. Financial audits refer to the process of auditing financial statements and ensuring whether the comply with statutory requirements and whether they follow GAAP.

ii operational audit is a structured audit which verifies the effectiveness, efficiency and economy of operations.These audits pave way of improvements to be done in the organization and these audits are future oriented.

iii. Compliance audit refer to a type of audit which ensure the organization's statutory compliance and adherence.The terms and agreements entered by it.

Benefits of audit for the company

i It helps the company to assess its growth

ii. It also helps the company in detection and prevention of frauds which takes place in a company.

iii. It facilitates the company to know its financial position through financial analysis done by auditors

Benefits to the society

i Its throws an insight to the society through it's audit opinion whether to invest on the company or not

ii. It serves as an trusted process whchw ensures that the financial reports are not materially misstated.