An audit process is one essential that any business entity can’t ignore. Conducting the audit process in the company highlights the high and low domains of a company. It helps the business owners, investors to get a gist of what’s going right and wrong in the company premises. During the audit process, an external auditor is appointed who looks into the core financial statements to make sure that the business transactions stand legally correct. Once the pre-requisites are held, the audit process gets initiated, and at the end, the auditor issues a report. This treatise will give you the insights of what an audit report is and its different types.
What Is An Audit Report?
An audit report is an opinion that auditor issues after critically analysing a company’s financial statements. During the audit process, an auditor takes utmost care to figure out whether the company follow the stated IFRS rules, and holds a clear financial record.
If any company is found to be involved in any fraudulent activity, such as misinterpreting the financial figures, providing false company reports, the auditor ends up issuing strict statements that break the trust of company’s stakeholders. Being a business owner or an investor, it would be beneficial for you to have a clear idea regarding the different types of audit reports that an auditor can issue during an external audit process.
4 Types of Audit Report
During an external audit process, the auditor ends up releasing the following reports depending on the financial clarity that the company holds.
An unqualified report is also called a clean report. Issued by the external auditors, this report states that the company affairs and statements are valid, and are free from any manipulation. Moreover, it also shows that the company stands true to its overall stakeholders, and a sense of trust gets build over time. Before you take the step of conducting an external audit, make sure that the auditor belongs to an experienced professional audit firm.
This report stands as an opposite to that of an unqualified report. If the external auditor fails to get transparency in the company’s financial statements, he issues a qualified report. Abiding the IFRS rules turns out to be extremely important for business entities. If your company doesn’t follow the rules stated accordingly, then an unqualified report might be issued. Moreover, the report also highlights the reason why it fails to stand as an unqualified report. Holding such a statement affects the trust that stakeholders bear in their mind.
If the audit process couldn’t be completed due to lack of financial statements or evidence, then the auditor issues a disclaimer report. The disclaimer report also highlights the possibility of a mismatch in the company’s financial statements.
This is the least favourable report that can ever be assigned by an auditor. The reason behind issuing such a certificate reveals the fact that the company has not abide by the IFRS standards. Moreover, it also highlights the fact that the company has indulged in fraudulent activity by misinterpreting the financial figures that have been presented to the auditor during the audit process.
In short, we can say that the business owners are answerable to the overall stakeholders. Holding an unqualified report will help you to boost your business in a better way. Be it conducting an internal audit or external; it is utmost important that you choose the right auditor who can help you to identify the business cracks and paves out a way to fix it.
The JAXA team stands as one of the premium audit consultants in Dubai. We take care of our client’s business and helps them to hold a good audit report. Our audit experts hold industry experience and can help you to understand the loopholes and fix it. To have a word, do contact us-we’d be glad to assist.