Audit Report Format
On completion of a statutory audit of a business, the Auditor based on the evidence obtained during the audit prepares an audit report and expresses an opinion on the financial statements of the company. The audit report thus prepared must conform to the Audit Report format established by the Institute of Chartered Accountants of India and have the following elements.
The audit report must have a clear title that indicates that the audit report is from an independent auditor.
The auditors report must be appropriately addressed as per the nature of the engagement. In case of a statutory audit of a company, the report will be addressed to the members of the company.
In the introductory paragraph, the Auditor should state the following:
All audit reports must have a section termed “Management’s Responsibility for the Financial Statements”, describing the responsibilities of those in the organisation for preparation of the financial statements. The management’s responsibility should include an explanation that management is responsible for the preparation of the financial statement and implementation of internal controls to ensure the preparation of financial statements are free from material misstatements.
All audit reports must have a section termed “Auditor’s Responsibility” that states that the responsibility of the auditor is to express an opinion on the financial statements based on the audit. The auditor’s report should also state that the audit was conducted in accordance with Standards on Auditing issued by the Institute of Chartered Accountants of India. In addition, the audit report must also explain that the auditing standards require the auditor to comply with ethical requirements and that the auditor planned and performed the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Finally, the auditor’s report should state whether the auditor believes that the audit evidence the auditor has obtained during the course of the audit is sufficient and appropriate to provide a basis for the auditor’s opinion.
All audit report must have a section with the heading “Opinion” that provides the opinion of the Auditor on the financial statements of the organisation. In case of unqualified opinion, auditors typically use terms such as “The financial statements present fairly, in all material respects, in accordance with [the applicable financial reporting framework’.