What type of audit report

Likewise, there are four types of audit reports which are based on this perspective. Unqualified audit report is the report auditors express their opinion that there is no material misstatement on financial statements.

In this case, the financial statements are prepared in accordance with the applicable accounting standards. Among the four types of audit report, unqualified audit report is the report that auditors usually issue most of the time. This is due to unqualified audit report is only the report that expresses there is no problem with financial statements no material misstatement. And most of the time, the adjustment is made and auditors issue the unqualified audit report as a result.

Qualified audit report is the report that auditors give a qualified opinion on financial statements. The writing of a qualified opinion is extremely similar to that of an unqualified opinion. A qualified opinion, however, will include an additional paragraph that highlights the reason why the audit report is not unqualified.

The worst type of financial report that can be issued to a business is an adverse opinion. In addition, the financial records provided by the business have been grossly misrepresented. Although this may occur by error, it is often an indication of fraud. When this type of report is issued, a company must correct its financial statement and have it re-audited, as investors, lenders and other requesting parties will generally not accept it.

This report will also include their opinion on the financial statements. In most cases, the audit report is issued to cover financial statements over 12 months or a year period. The government agency uses the audit reports and financial statements to assess the completeness and accuracy of the tax declaration.

Shareholders and the board of directors use the audit report to assess the integrity of management and transparency of financial statements. Different audit reports contain different audit opinions, and the main cause is the different misstatements found in the financial statements.

Therefore, different types of audit reports represent a different level of assurance. There are four types of audit reports issued by auditors on financial statements. Each type of report contains different meanings and messages from auditors to users of financial statements.

The following are the detail of audit reports. The auditor issued an unqualified audit report to financial statements when auditors found no material misstatements after their testing. Therefore, this report contains an unqualified opinion from an independent auditor.

The report showed that the entity financial statements are prepared and present true and fair and complying with the accounting framework being used. The heading of the document typically includes the addressee, auditor's name, work location and the date they performed the audit. Auditors also note the timespan of the financial records they reviewed.

For example, an auditor may only perform an audit based on the company's past year of financial statements. Finance professionals usually separate the body of audit reports into these sections:.

Regardless of the type of result an auditor issues, they also provide a written explanation of their responsibility. This part of the report verifies that the auditor performed the audit to the best of their ability and that their judgment is free of any personal agendas. The next paragraph of an audit report expresses an auditor's professional opinion regarding the financial status of a company. An auditor records whether the audit type is a clean, qualified, disclaimer or adverse opinion report, though they do not always present their opinion in those particular terms.

Instead, an auditor often states whether the company has followed the GAAP standards. The auditor's opinion paragraph of the report usually includes:. This section of an audit report explains why an auditor issued the report type. The content of the basis for the opinion section can vary depending on the audit report type.

The auditor's basis for opinion paragraph usually includes:. This section sometimes includes an auditor's recommendations for improvement, especially when the company earned a qualified audit report. Though it is not always applicable, the next section of an audit report can be a statement of any additional reporting responsibility. If an auditor discovered illegal practices within the company they audited, they may report those practices here. Depending on the type of audit performed, there may be additional responsibilities to be completed outside of an auditor's typical duties in order to conduct fair assessments.

Related: 15 Types of Audits. After an auditor fully explains the audit report type they have issued, they conclude the document with their official signature, the date of the signing and the city in which they signed.

This information allows consumers and investors to know who conducted the assessment process and how recent the report is. Audit reports are only confidential during the auditing process. After an auditor makes their final decision, they release audit reports to the public. Because auditors use a similar structure to write audit reports, members of the public and companies can understand the outcome of an audit and what it implies about the financial position of a company. We have audited the financial records of Bright Inc.

We have reviewed the related statements of income, shareholders' equity, liability and expense reports for the previously stated year. These financial statements are the responsibility of Bright Inc's management.