AUDITOR’S REPORT PART 1

•     AUDITOR’S REPORT PART 1
ELEMENTS OF AUDIT REPORT
DR SHASHI AGGARWAL

•     AUDITING/CONTEMPORARY AUDITING

•     MEANING OF AUDITOR’S REPORT

1.       AN AUDITOR’S REPORT IS THE FORMAL RESULT OF ALL THE EFFORTS THAT GOES INTO AUDIT

2.       COMMUNICATING THE AUDITOR’S FINDING TO THE INTERESTED USERS IS PART OF ALL AUDITS

3.       FINAL PHASE OF AN AUDIT INVOLVES PREPARING THAT COMMUNICATION KNOWN AS AUDITOR’S REPORT

4.       LANCESTER,” 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 FULL FACTS OF SUBJECT MATTER OF THE REPORT.

5.       THE LANGUAGE AND WORDS USED IN AUDIT REPORTS ARE OF GREAT IMPORTANCE

6.       THE EXTENT  OF LIABILITY OF THE AUDITOR FOR NEGLIGENCE AND FRAUD DEPENDS UPON THE WORDING OF THE REPORT.

•     THE REPORT IN WHICH AUDITOR EXPRESSES HIS OPINION ON THE FINANCIAL STATEMENTS KNOWN AS AUDIT REPORT

•     AS PER SA 700,AUDIT REPORT SHALL BE IN WRITING ( HARD COPY FORMAT USING ELECTRONIC MEDIUM)

•     IMPORTANCE OF THE AUDIT REPORT

1.       AUDIT REPORT IS AN ESSENTIAL PART OF AUDIT PROCESS AS IT EXPLAINS THE CONCLUSIONS DRAWN BY THE AUDITOR ABOUT ACCOUNTS AND FINANCIAL STATEMENTS

2.       THE SHAREHOLDERS OF THE COMPANY ARE THE TRUE OWNERS OF THE COMPANY AND NOT THE MANAGEMENT. TO FORM AN OPINION UPON THE WORKING OF THE MANAGEMENT,THE SHAREHOLDER DEPEND UPON AUDITOR’S REPORT

3.       BUT AUDIT REPORT DOES NOT GUARANTEE AS TO THE ACCURACY OF THE FINANCIAL STATEMENTS OF THE COMPANY

4.       IMPORTANCE OF AUDIT REPORT

5.       SECTION 129 (1) : THE FINANCIAL STATEMENT SHALL GIVE A TRUE AND FAIR VIEW OF THE STATE OF AFFAIRS OF THE COMPANY COMPLY WITH ACCOUNTING STANDARDS U/S 133 AND SHALL BE IN THE FORM AS MAY BE PRESCRIBED UNDER SCHEDULE III

6.       SECTION 129 (2) : AT EVERY ANNUAL GENERAL MEETING OF A COMPANY,THE BOD OF THE COMPANY SHALL LAY BEFORE SUCH MEETING FINANCIAL STATEMENTS OF FOR THE FINANCIAL YEAR

7.       SECTION 134 ( 2) THE AUDITOR’S REPORT SHALL BE ATTACHED TO EVERY FINANCIAL STATEMENTS

•     THE AUDIT REPORT SERVES THE FOLLOWING PURPOSES

1.       IT PROVIDES CREDIBILITY TO THE FINANCIAL STATEMENTS

2.       IMPARTIAL OPINION

3.       RELIABLE INFORMATION TO SHAREHOLDERS AND OTHER USERS

•     ELEMENTS OF AUDIT REPORT

•     ON THE BASIS OF SA REVISED  700 : FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS FOLLOWING ARE THE ELEMENTS OF AUDIT REPORT

1. TITLE : THE TITLE OF THE REPORT SHALL CLEARLY INDICATE THAT IT IS AN INDEPENDENT AUDIT REPORT AND DIFFERENT FROM REPORT ISSUED BY OTHER PERSON
2. ADDRESSEE : SHALL BE ADDRESSED TO THE PERSONS AS PER CIRCUMSTANCES OF HIS ENGAGEMENTS LIKE MEMBERS/SHAREHOLDERS OR THOSE CHARGED WITH GOVERNANCE
3. INTRODUCTORY PARAGRAPH :-

1. SHALL INCLUDE ENTITY WHOSE FINANCIAL STATEMENT HAVE BEEN AUDITED
2. TITLE OF EACH COMPONENT OF FINANCIAL STATEMENT
3. ACCOUNTING POLICIES AND EXPLANATORY INFORMATION
4. DATA AND PERIOD COVERED BY EACH STATEMENT AND FACT THAT FINANCIAL STATEMENTS HAVE BEEN AUDITED

• MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENT :

1. DESCRIBED THAT MANAGEMENT IS RESPONSIBLE FOR THE PREPARATION OF FINANCIAL STATEMENTS AS PER FINANCIAL REPORTING FRAMEWORK
2. THIS RESPONSIBILITY INCLUDES DESIGN ,IMPLEMENTATION AND MAINTENANCE OF INTERNAL CONTROL RELEVANT TO PREPARATION OF FINANCIAL STATEMENTS THAT ARE FREE FROM MATERIAL MISSTATEMENT WHETHER DUE TO FRAUD OR ERROR

4. AUDITOR’S RESPONSIBILITY : STATE THAT RESPONSIBILITY OF AUDITOR IS TO EXPRESS AN OPINION ON FINANCIAL STATEMENT ON THE BASIS OF AUDIT
5. AUDITOR ‘S OPINION :- WHILE GIVING UNMODIFIED OPINION ,SUCH OPINION SHALL BE THAT FINANCIAL STATEMENTS GIVE A TRUE AND FAIR VIEW IN ACCORDANCE WITH FINANCIAL REPORTING FRAMEWORK
6. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS :

1. AS REQUIRED BY COMPANIES ( AUDITOR ‘S REPORT ) ORDER 2016 ISSUED BY THE CENTRAL GOVERNMENT U/S 143 (1) OF THE ACT
2. AS REQUIRED BY SEC 143 ( 3 ) 0F THE ACT

7. DATE AND PLACE OF AUDITOR’S REPORT : SHALL BE DATED NOT EARLIER THAN THE DATE ON WHICH AUDIT EVIDENCE HAS BEEN OBTAINED FOR THE PURPOSE OF AUDITOR’S OPINION ON FINANCIAL STATEMENTS. THE REPORT SHALL ALSO NAME SPECIFIC LOCATION USUALLY THE CITY WHERE AUDITOR MAINTAINS OFFICE
8. AUDITOR’S SIGNATURE :SHALL BE SIGNED ALONG WITH MEMBERSHIP NUMBER OF INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA
9. READING AND INSPECTION OF AUDITOR’S REPORT :

1. MUST BE READ BEFORE THE SHAREHOLDERS  IN GENERAL MEETING
2. KEPT OPEN FOR INSPECTION OF EVERY MEMBER OF THE COMPANY
3. ATTACHED TO EVERY BALANCE SHEET BEFORE EVERY ANNUAL GENERAL MEETING AND TO EVERY ANNUAL RETURN

10. FEATURES OF GOOD AUDIT REPORT

1. WELL WRITTEN,BRIEF AND COMPLETE : NO MATERIAL INFORMATION IS SKIPPED
2. BASED ON RELIABLE AND FACTUAL INFORMATION
3. THE AUDITOR SHALL EVALUATE ACCOUNTING SYSTEM AND POLICIES OF THE COMPANY AND PROVIDE BALANCED CRITICISM AND SUGGESTIONS FOR IMPROVEMENT IN FUTURE
4. SHOULD BE PRESENTED AS PER THE PROVISIONS OF THE COMPANIES ACT
5. HIGHLIGHT THE WEAKNESSES OF INTERNAL CONTROL SYSTEM WHILE EVALUATING THE STATE OF AFFAIRS AND MAKE SUGGESTIONS FOR THE FUTURE
6. SHALL BE IN CLEAR AND AMBIGUOUS LANGUAGE