Question

Explain the nature and content of audit reports. Has the new expanded audit format in UK worked?

Answer 1

An audit report is an independent examination of financial statements by an auditor who is an independent evaluator . After studying of the financial statements, management accounts, other accounts or related reports they come into a conclusion weather the business has projected its performance in a true and unbiased manner.

The audit reports contain the opinion of an auditor stating that he is satisfied with the true and fair representation of the operations and transactions of an enterprise during a particular period. An audit report with an Unmodified Opinion is also known as a 'Clean Report'

Yes, the extended audit report has been widely accepted in the UK. How far UK has come from the short, boilerplate, uninformative report to the extended report covering the Key Audit Matters over a number of pages. They were designed to enhance the level of investor confidence in audit, by providing greater insight and understanding from the work of auditors.

It has helped in higher audit quality, improved financial reporting , However there are fears fear that some information could be buried within these longer reports. It has made clear to the management that they are responsible for the financial statements and the auditors are for the audit.