9 benefits of marginal costing

Ten (10) basic elements of audit report

Audit report is the end product of audit process in which auditor express his opinion on truth and fairness of financial statements. the audit report have uniform content and structure to enable understandability and comparability between audit report of one entity and another or between report of different period of the same entity.

The following are basic elements of audit report:

  • Title – audit report should have title which include the wording ‘independent auditor‘ to distinguish this report from others that may be prepared internally by the company.
  • Addressee – the report should be appropriately addressed as required by the engagement and local regulations. This is normally to the shareholders of the company or those charged with governance.
  • Introductory paragraph – this section identifies financial statements being audited, including the date and period covered. It also identifies the title of each statement that comprise the financial statement being audited
  • Management responsibilities for the financial statements – this part of the report is included to describe the responsibilities of those who are responsible for the preparation of the financial statement including those in respect of internal control.
  • Auditor’s responsibilities – this section describe the auditor’s responsibilities for expressing opinion, notifies the users that audit was carried out in accordance with ISAs and explains what an audit involves.
  • Opinion – this indicate financial reporting framework used to prepare the accounts and states the auditor’s opinion as to whether the financial statement present fairly in all material respect (or show true and fair view) the financial position of the audited entity in accordance with that framework.

  • Date – the auditor’s report should be dated as at the completion of the audit to show that the auditor has considered any event after the reporting period date up to the date of completion and how these might affect the financial statements. The report should not be dated earlier than the date on which the accounts are signed or approved by management.
  • Auditor’s address – the audit report should name a specific location, which is normally the city or town where the auditor maintains the office that has responsibility for audit.
  • Auditor’s signature – the audit report should be signed in the name of audit firm, the personal name of the auditor, or both as appropriate.it is normally signed in the name of the firm because the firm assumes responsibilities for the audit.
  • Report on legal and other requirements.

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