In: Accounting
What’s the reason behind issuing audit report after management acceptance of financial report?
The reason behind issuing the audit report after management acceptance of the financial report
The audit report is important because banks, creditors, and regulators require an audit of a company's financial statements. A clean audit report means a company followed accounting standards while an unqualified report means there might be errors
Provide assurance on Financial Statements. Audit reports issued by a professional and independence auditor which is operational independence from the management of the entity. The report issued from them could help the users of the financial statement to assure that financial information is correct or not.
The goal of an auditor's report is to document reasonable assurance that a company's financial statements are free from error. Along with balance sheets, profit & loss statements, and directors reports, auditor's reports make up part of a company's statutory accounts.
Advantages of Audit Reports:
Components of an Auditor's Report
The auditor's letter follows a standard format, as established by generally accepted auditing standards (GAAS). A report usually consists of three paragraphs.
Clean or Unqualified Report
Qualified Opinion
Adverse Opinion
Disclaimer of Opinion