Have you ever come across an Audit report or you require one but don’t understand what an Audit report is? Our professional Auditors from our Audit team outline all you need to know about what an Audit report is in the following article.
What is an Audit report?
Firstly, what is an Audit report? In simpler terms, an audit report is a written opinion of the auditor on the reliability and validity of a company’s financial statements. The report needs to be finalised by a licensed accountant or auditor. This report aims to provide reasonable assurance that a company’s financial statements do not have errors.
Types of Audit reports.
An audit report may be of the following:
A clean opinion, also known as an unqualified opinion report, includes the auditor’s opinion, which indicates that all statements and documents evaluated are correct and acceptable.
The qualified report is generally positive as the financial documentation evaluated is correct. However, this report will include a section on why it is not considered an unqualified report. It means the company did not adhere to the regulations.
The adverse opinion. Receiving such a report means the company did not abide by the standards and discrepancies in the company’s financial statements were discovered.
The disclaimer of opinion refers to reports that will not be finalised due to particular reasons.
In the report.
A correctly written up audit report will cover the following topics.
The responsibilities of the auditor and the management of the entity.
The scope of the audit.
The auditor’s opinion of the entity’s financial statement.
Audited Annual Accounts are to be prepared and filed with the Malta Business Registry in Malta.
Dilemmas with your Auditors.
Can one trust and rely on the financial statements prepared by an Auditor?
Yes, auditors are experienced individuals in their field of interest and can issue their audit opinion on the financial statements. An auditor’s task is to examine, verify and give their opinion on the financial statements. Hence, it is your responsibility to prepare your financial statements. An auditor must also be independent, meaning, ideally, the same person/company does not prepare financial statements and audits them.
Can an auditor force you to book something?
No, the auditor is not in charge of your books, however, will express their opinion on what you have booked. Hence, the auditor will propose adjustments in your financial statements.
The auditor has to issue their opinion in line with our desires since we pay the fees.
The correct reply to this is no. A mentioned previously; the auditor must be independent. Hence, independent opinion does not mean an opinion in line with the client’s desires. The auditor’s role is to provide the audit report and give good advice about your accounting.
It is crucial also to note that an audit report is free of material misstatements refers to information in the statement that is incorrect and may impact the economic decisions of an individual relying on the statements. An auditor’s opinion is not a guarantee, but rather a statement of professional judgement. Inherent limitations such as fraud, degree of uncertainty, etc., prohibits the auditor from obtaining absolute assurance that financial statements are free from material misstatements.
When an auditor proposes adjustments in your books, there may be two outcomes.
The proposed adjustments are accepted and booked. The auditor will then issue an unqualified audit report.
The proposed adjustments are refused, and books are left as is. The auditor will issue an opinion with a qualification audit report.
Why GCS Malta?
The team of professional auditors at GCS Malta have vast experience in both external and internal auditing to guarantee all clients that their financial statements will be examined to adhere to the Maltese legislation. Benefit from a risk-based audit approach and sign up to our auditing services today.
