4 Types of Audit Report

Types of Audit Report

There are four types of Audit Report. They are—

  1. Clean Report
  2. Qualified Report
  3. Disclaimer
  4. Negative Report

They are briefly explained as follows.

1. Clean Report

If the auditor has no reservation in respect of matters presented in the financial statements, he gives a clean report. He states that

the financial statements give a true and fair view of the state of affairs and profit and loss account during the period.

2. Qualified Report

If the auditor has any reservation in respect of the certain matters mentioned in the financial statements, he may qualify his report. The auditor may qualify his report only when the subject matter of qualification affects the truthfulness and fairness of the financial statement materially.

1. All the qualifications shall be stated by the auditor in clear and in unambiguous manner in his report.

2. Even if the subject matter of qualification is included in the notes presented by the management, which form a part of the financial statement, auditor has to repeat the subject matter of qualification again in his report clearly.

3. He shall use the word ‘Subject to‘ before stating his qualifications.

4. He shall quantify the effect of the qualifications on the financial statements as a whole as well as on individual items.

5. If the effect of qualification could not be quantified with accuracy, auditor may make an estimate on reasonable basis.

3. Disclaimer

While conducting the audit, the auditor may fail to obtain the required information and explanation or the books of accounts may not be available due to various reasons, or there may arise various situations, which shall restrict the scope of the duties of the auditor.

Under such situations, he may not be in a position to form an opinion, then the auditor shall disclaim to give an opinion.

4. Negative Report

If the auditor is of the opinion that the financial statement does not show the true and fair view of the state of affairs of the business, he shall give an adverse or Negative Report.

Leave a Reply

Recent Posts

Related pages

examples of negotiable instrumentsimportance of departmentationrediff forexwhat is performance budgetingwhat is the meaning of allotformula for calculating turnovermarginal costing and decision makingperil defauditors working paperswhat is difference between trial balance and balance sheetadvantages and disadvantages sole traderwhat are the elements of valid contractadvantages and disadvantages of mixed economy systemdefine audit programmemeasures to control absenteeismbasis of apportionment of overheadsmbo stepsdisadvantages of planned economyforfeiture of sharesactivity based costing methodicici bank introductiontypes of auditors opinionsscientific management theory by f w tayloradvantages and disadvantages of a franchise agreementauditor negligence definitionmultistage and multiphase samplingstandard audit tick marksmeaning of assignee in insurancevaluation venture capital methodfranchisor advantagesprecies meaninghindi meaning of budgetwhat is factory overheaddefine deficit financingcharacteristics of finance leasechits fundshiring and leasing definitionbudgetary control meaningfactory overhead expensesanticipatory repudiation discharges a contractoverheads definition accountingpiece rate payment systemadvantages of small scale farmingstatutory audit meaningwhat is capex planningfeatures of socialist economic systemabsorption costing accountingdisadvantages of investing in stock marketglobal retailing definitionsales turnover ratio definitionultra vires company lawimpersonal accountsnationalization advantages and disadvantageswhat is inductive and deductiveoligarchy advantages and disadvantagesfactors influencing make or buy decisionsauthoritarian leadership style in nursingwhen is the corporate veil liftedjob order costing definitionrelayoutmeaning of irdaautomatic stock replenishmentwhat is zero based budgeting definitionmerits and demerits of online marketingcost variance definitionfederation of indian export organisationsgeneral agreement on tariffs and trade objectivesdebtor collection period definitionrole of international monetary fund in international tradeadvantage and disadvantage of small businessdefine periodicaldirect material usage variance