The auditor should check the books of accounts and balance sheet and need to prepare the audit report addressing to the shareholders and present it to the concerned department and to the company. An audit report is always critical to influencing the perceived value of any financial statement’s audit. Copy of such report should be sent to all the shareholders. Generally, the Auditor’s report is published with the Annual report of the Company. The audit report should contain the following things.
- The title should be an ‘Independent Auditor’s Report’. Answer, clarification, and explanation of furnished questions are given by the concerned authority satisfactory or not.
- Income statement and balance sheet are prepared by the company in the prescribed structure or not.
- Accounts are maintained as per the provision of laid down rules and regulations or not.
- A balance sheet of the company presents a true and fair view of the financial position or not.
- The high ranking official, representatives, and staffs of the company have performed work as per the provision of rules and regulations or not; they have committed fraud or not.
- Transactions of the company are satisfactory or not. The auditor should provide a suggestion if necessary.
In addition to the above facts, an auditor should include other facts using his own discretion. Other facts which are to be incorporated in the report are given below:
- An auditor should include all the facts demanded by the Company Act.
- The auditor should include the true and fairness of books of accounts as well as facts where he is not able to satisfy himself.
- The auditor should include all the important facts which directly affect the financial position of the company.
- Some abnormal transactions which are found during the course of audit but they are necessary for the company should be incorporated in the audit report.
- If financial statements like income statement and balance sheet are not maintained properly, an auditor should clearly state in the audit report.
- An auditor should include in the report that the audit of books of account is made in detail or applying a test check.
- If there is a special situation, an auditor should include it in the audit report.
If auditor detects any frauds and errors during the course of an audit, he must include in an audit report clearly stating their effect on financial statements. Like regarding the valuation of stock, depreciation system demarcation of capital and revenue, etc.