Auditor's report
From Wikicpa
The auditor's report is a formal opinion issued by an indepedent auditor. The report is normally attached to a company's financial statements. Or in the case of a Publicly held company, included with the annual report. The auditor's report is intended to advise the statement reader as to whether the company's financial statements have been prepared in accordance with Generally Accepted Accounting Principles (GAAP), whether they are free of material misstatement and whether they show a "true and fair" view of the operating results, financial position and cash flows of the company concerned.
Typically, an auditor's report consists of three paragraphs. The first states the responsibilities of the auditor and directors; the second gives the scope of audit work, stating that GAAP was used; while the third paragraphas gives the auditor's opinion.
Also known as the "Independt Auditor's Report"
Sample: Unqualified Opinion Report
To the Board of Directors and Shareholders
ABC Company
Address
We have audited the accompanying balance sheets of ABC Company as of December 31, 200X and 200X, and the related statements of income, retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of December 31, 200X and 200X, and the results of its operations and its cash flows for the years then ended in conformity with accounting principals generally accepted in the United States of America.
(Signature)
(Date)
Understanding the Auditor's Report
If all the financial transactions were properly and accurately recorded and if the owners of the business were entirely honest and sufficiently skilled in matters of accounting and recording, there would be little need for independent auditing. However, human nature being as it is, there probably will always be a need for the auditor. Many businesses, depending on size and nature, employ internal auditors. Their responsibilities and functions, while similar to those of an independent auditor, are vitally different in a major respect having to do with impartiality and independence.
The Auditor Renders a Report on the Financial Statements, not on the Accounting Records
Contrary to some beliefs, a certified public accountant's letter of opinion is not a certification and actually is nothing more than an opinion. It is not a guarantee. As a professional, the accountant expresses a detached judgement. He says, in effect, that proper accounting principles appear to have been applied consistently by management and that standard auditing procedures deemed applicable under particular circumstances have revealed nothing which would cause him to question the fairness of the resultant statements. It is important to recognize that the financial statements and all supplemental data that may accompany the statements are the responsibility of the client. The accountant assumes responsibility only for the opinion that accompanies the report.
The primary purpose of an audit is to provide assurance to the users of the financial statements that these statements are reliable. Auditors do not express an opinion on the client's accounting records. The auditors' investigation of financial statement items includes reference to the client's accounting records, but is not limited to these records.
The auditors' standard report states that the examination was performed in conformity with generally accepted auditing standards and by expressing an opinion that the client's financial statements are presented fairly in conformity with generally accepted accounting principles. However, if there are deficiencies in the client's financial statements or limitations in the auditors' examination, or if there are other unusual conditions about which the readers of the financial statements should be informed, auditors' cannot issue the standard report. Instead, they must carefully modify their report to make these problems or conditions known to users of the audited financial statements.
Other types of Auditor's Reports:
