The audit report is a key deliverable which shows the end results of the entire audit process. The users of financial statements like Investors, Lenders, Customers, and others base their decisions and plans on audit reports of any enterprise. An audit report is always critical to influencing the perceived value of any financial statement’s audit.
The auditor should be careful in issuing the audit report as there is are a large number of people placing reliance on such report and taking decisions accordingly. The report should be issued by being unbiased and objective in discharging the functions.

What is an audit report?
An audit report is a document prepared by an auditor that serves as a summary of a company’s financial status. This document lists a company’s assets and liabilities, as well as the auditor’s educated opinion on the business’s finances. Auditors then release this document to the public for consumers and investors to see. While audits may be mandatory, companies also request them. Companies seeking to find fiscal areas that could improve or those hoping to find investors may be interested in having an audit performed for their business.
Contents of an Audit Report
Heading | Brief of contents |
Title | Title should mention that it is an ‘Independent Auditor’s Report’. |
Addressee | Should mention clearly as to whom the report is being given to. For example Members oMentions that it is the Management’s responsibility to Prepare the Financial Statements. f the company, Board of Directors |
Management’s Responsibility for Financial Statements | |
Auditor’s Responsibility | Mention that responsibility of the Auditor is to express an unbiased opinion on the financial statements and issue an audit report. |
Opinion | Should mention the overall impression obtained from the audit of financial statements. For example Modified Opinion, Unmodified Opinion |
Basis of the Opinion | State the basis on which the opinion as reported has been achieved. Facts of the basis should be mentioned. |
Other Reporting Responsibility | If any other reporting responsibility exists, the same should be mentioned. For example Report on Legal or Regulatory requirements |
Signature of the Auditor | The engagement partner (auditor) shall sign the audit report. |
Place of Signature | The city in which audit report is signed. |
Date of Audit Report | Date on which the audit report is signed. |
Opinion in an Audit Report
Unmodified Opinion
Issued for any audit where the auditor is satisfied that the financial statements present a true and fair view of the operations and transactions in an enterprise during the period. An audit report with an Unmodified Opinion is also known as a ‘Clean Report’. An Unmodified report develops confidence among users of Financial statements and annual reports of an enterprise. It provides an impression that the financial statements are reasonably free from any misstatements and results as appearing there are true and fair.
Modified Opinion
Whenever the auditor has specific findings during his / her audit and concludes that an Unmodified Opinion cannot be issued due to the nature of findings, a Modified Opinion is issued in the audit report. There are two basic reasons due to which an auditor concludes on issuing a Modified Opinion:
- Based on the audit and evidence, finds out that the financial statements contain a certain degree of material misstatements.
- Unable to obtain sufficient and appropriate evidences to conclude that the financial statements are free from material misstatements.
There are three kinds of modified opinions which are issued according to the findings and circumstances:
- Adverse Opinion
- Qualified Opinion
- Disclaimer of Opinion
Qualified Opinion
A Qualified Opinion is given in a situation where:
- The auditor concludes that misstatements are material but the impact is not so high that it would render the whole financial statements unacceptable; or
- The auditor is unable to obtain sufficient or appropriate audit evidence but concludes that there are indications of misstatements in the financial statements (but the degree is not high).
Adverse Opinion
An Adverse opinion shall be issued by the auditor where he concludes that on the basis of evidence obtained and procedures performed, there are material misstatements in the financial statements and the impact of the same is high.
Disclaimer of Opinion
A Disclaimer of Opinion is to be issued by an auditor in cases where the auditor concludes that he / she is not able to obtain sufficient and appropriate evidences. In such scenario, the auditor is not able to form an opinion and thus, disclaims form providing an opinion on the financial statements. The impact of material misstatements and degree of the same is high enough.
FAQs
Who issues the Auditor’s Report?
The report is issued by a Chartered Accountant or an audit firm registered and qualified to audit financial statements under the law.
Why is an Auditor’s Report important?
It provides trust and transparency. Investors, lenders, and stakeholders rely on it to make informed financial decisions.
