1. Published by
Meaning of audit report
 An audit report is usually of the financial
records and accounts of a company.
 A report is a statement of collected and
considered facts, so drawn up as to give
clear and concise information to persons
who are not already in possession of the
full facts of subject matter of the report
 The audit reporting is the communication
of audit conclusions after having carried
out the audit process in accordance with
audit plan.
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2. THE CONTENT OF AUDIT REPORT
According to the companies act, duty of the
auditor is to make report to shareholder. After
review and assessment of conclusions, the
auditor’s frames up an overall conclusion. The
overall conclusion must concern matters with
regard to the following:
 Whether the financial information disclosed in
financial statements has been prepared using
acceptable accounting policies.
 Whether the said policies are consistently applied
year after year;
 Whether the financial information complies with
relevant regulations & statutory requirements;
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 Whether the view presented by the financial information
as a whole is consistent with the auditor’s knowledge of
the business of the entity;
 Whether there is adequate discloser of all material
matters relevant to the proper presentation of the
financial information.
 Moreover, Auditor obtain all information; law required all
books kept by the company; Attachment of branch audit
report with original report; B/S and P/L account are
agreed with books of A/Cs and return and B/S and p/L
accounts comply with Accounting standard would be the
contents of auditor report.
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4. Meaning of true and fair view
 Indicates that the annual accounts to be prepared in
a manner to give true and fair view of financial
information.
 Emphasizing on accuracy.
 Should have particulars required by the articles and
the statue.
 The words “true and fair view” were considered to
be fair usage in the place of true and correct view.
 The expression „true & correct‟ indicated exactitude
or precision.
 Balance sheet and P/L A/C to be true and fair
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5. Report vs Certificate
Topic Report Certificate
Main Informing shareholders about the Giving assurance about the
Objective fairness of financial statement correctness of accounts
Making Auditor will make opinion and give Auditor can not make any
opinion & necessary advice about the mistakes opinion or advice about the
Objective of accounts accounts
Working area Report area is fixed Area for certificate is not fixed
Preparation At the end of the every financial year There is no fixed time table for
time certificate
Responsibility Auditor will not be responsible Auditor will be responsible
Risk of Auditor’s risk is huge Risk is lower then report
auditor
Criticism Scope for criticism No scope for criticism
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6. Basic element of an audit Report
 a) Title ; b) Addressee
 c) Opening or introductory paragraph-
 1.Identification of financial statement audited and
 2.A statement on the responsibility of the entity’s
management and that of auditor
 d) Scope paragraph-
1.A reference to the auditing standards generally
accepted in India and
2.A description of work performed by the auditor.
e) opinion paragraph-
1.A reference to the financial reporting framework used
to prepare the financial statement and
2.Expression of opinion on the financial statement.
f)Date of the report; g)Place of signature
h)auditor’s signature.
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1.Title:
The title indicates the nature of report. The title should like-”auditor report” or branch
auditor report. The title distinguishes this report from other report like directors
report of an accountant report on compilation of the accounts etc.
2. Addressee:
The auditor report should address the person to whom it is meant to be forwarded.
Generally the report is submitted to the person who appoints the auditor.
3. Opening or introductory paragraph
The introductory paragraph should identify-
1.The financial statement with respect to which audit opinion is given-financial
statement are identified by title, period covered, the entity to which it relates etc.
2.The clear making of the responsibility between management and auditor-the report
should state that the financial statements are the responsibility of management; the
auditor’s responsibility is limited to expression of opinion thereon.
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4.Scope paragraph:
The scope paragraph should indicate that auditor had planned and
performed the audit to obtain reasonable assurance whether
financial statement are free from material misstatement.
1.Examining on a test basic, evidence to support the accounts
disclosures in financial statement.
2.Examineng accounting principles used in the preparation of
financial statement.
3.Evaluating the overall financial statement presentation.
5.Opinion paragraph:
The opinion paragraph of the report should indicate the financial reporting
framework used to prepare the financial statement and state the
auditor's opinion as to whether the financial statement given a true and
fair view in accordance with that financial reporting framework and
comply with the statuary disclosure requirements. 8

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6.Date of the report:
The date of report indicate the date on which the auditor signs his
report. it indicates that the auditor has considered the effect on the
financial statements and also on his reports of events occurred upto
that date.
7.Place of report:
The town in which the audit report is signed should be indicated.
8.Audiors signature:
The report should be signed by the auditor in his personal name.
where the firm is auditors of the entity, the signature should be
in the personal name of the partner as well as in the firm name .
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10. Statutory Requirement of Auditor’s
Report
There is no mandatory reporting requirement under
section 227 (1A), the auditor is specially required to
inquire in respect of six matters specified. He can report if
results of inquiry so warrant. The matters to be inquired
are:
(1) Whether loans and advances made by the company
on the basis of security have been properly secured and
whether the terms on which they have been made are not
prejudicial to the interest of the company or its
members.
(2) Whether the transactions of the company which are
represented merely by book entries are not prejudicial to
the interests of the company.
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(3) Whether the loans and advances made by
the company have been shown as deposits.
(4)In case of companies other than investment
companies or banking companies, whether
the shares, debentures, or other securities
have been sold at prices less than the porches
price.
(5) Whether personal expenses have been
charged to revenue account.
(6) If shares have been allotted for cash,
whether the cash has been actually received,
If not whether the position is correctly stated
in the balance sheet in a manner that is
correct and misleading.
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12. Qualification of good report
 It should be based on factual information
 It should be convincing
 It should be forceful
 It should be unbiased
 It should be point out mistakes
 It should be a constructive criticism and
not be in reprimanding tone
 It should be brief. If it is lengthy , the
object of the report is defeated even if it
is well written.
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