Audit Reports

Audit Reports

Murodullo Turdiyev HBA-81i

Plan:

• 1. What is audit report and its types?
• 2. Four categories of audit reports
• 3. Audit report paragraphs

What is audit report?

• The audit report is the final step in the audit process and the means by which the auditors communicate their opinion about the financial statements Corporate Law and auditing standards sets out the requirements governing the format and content of the audit report

Parts of the Audit Report

• Basic elements of the audit report include:
• Title
• Addressee
• Section describing audit scope
• Managements ultimate responsibility for preparation of the financial statements
• Auditor has conducted an independent audit in order to express an opinion
• Audit conducted in accordance with Auditing standards
• Audit procedures have been carried out on a test basis
• Section expressing auditors opinion on the financial report
• Auditors signature
• Auditors address and
• Date of audit report

TYPES of Audit Report

• Two basic types of audit reports are issued:
• Unqualified report or
• Qualified report

Un Qualified Report

• An unqualified report is issued when the auditor is satisfied that the financial statements present fairly the financial statements present fairly the financial position, financial performance and cash flows of the entity in accordance with accounting standards. Most reports are unqualified as most problems are resolved with management prior to the report. Applies to quality of financial statements not to quality of entity as investment or credit risk

Conditions for Standard Unqualified Audit Report

• 1. All financial statements are included.
• 2. Sufficient evidence has been accumulated
• 3. The financial statements are presented in accordance with generally accepted accounting principles.
• 4. There are no circumstances requiring the addition of an explanatory paragraph or modification of the wording of the report.

Unqualified Report with Explanatory Paragraph

• 1. Lack of consistent application of generally accepted accounting principles
• 2. Substantial doubt about going concern
• 3. Auditor agrees with a departure from promulgated accounting principles
• 4. Emphasis of a matter
• 5. Reports involving other auditors

Emphasis of matter

• Auditor may add an emphasis of matter section to the audit report whilst still expressing an unqualified opinion of the financial report
• Purpose is to draw attention to relevant information to users of the audit report.
• Circumstances;
• Additional disclosures with which the auditor concurs
• Inherent uncertainty (going concern) that is adequately disclosed
• Inconsistent other information included with the audited financial reports
• Subsequent events

Qualified Report

• Where the auditor is unable to resolve problems or disagreements with management a qualified report will be issued. Circumstances leading to qualification of an audit report include;
• Disagreement with management
• Conflict between applicable financial reporting frameworks
• Limitation of scope

INTRODUCTORY PARAGRAPH

• Statement that
• – Financial statements were audited
• – Financial statements are management’s responsibility
• – Auditor’s responsibility is to issue opinion

SCOPE PARAGRAPH

• Statement that
• – Audit conducted in accordance with IAS
• – IAS requires planning, performing audit to obtain reasonable assurance financial statements free from material misstatements
• – Audit includes

• Examining evidence on test basis

• Evaluating accounting principles & estimates

• Evaluating overall financial presentation

The list of used resources:

• 1. Main book: Auditing and assurance services by Beasley
• 2. Acca books
• 3. Presentations which are given to us

Thank you for your attention