Checking the financial state of affairs of the company by an independent expert, called an audit, is a complex organization process that requires high professionalism and the strict implementation of many requirements. The result of the audit is a document that contains the opinion of the auditor checking the company on how the company records are properly maintained, what errors it revealed due to employee negligence or due to fraud, and how much these inconsistencies can harm the company by affecting the correctness of acceptance company management further decisions based on false reporting data. This document is an audit report.
What is this document? The audit report is a special sample letter in which the inspector talks about how the audit was conducted and what results were identified in the course of its implementation. The auditor must necessarily mention in the letter which sources of obtaining audit evidence were used by him - the importance of this paragraph is explained by the fact that the auditor must reasonably confirm that the information analyzed by him is reliable. In addition, the auditor must submit a complete audit plan and program. In other words, the organization of the preparation of the audit should be described in full in the letter. In this case, the examiner immediately cuts off unnecessary questions about the fact that he initially did something wrong.
The audit report is of various types, depending on what results the auditor came to during the audit. If the entire accounting system at the enterprise works correctly and no errors and inaccuracies are found, the type of conclusion will be positive. This means that the auditor fully approves the financial condition of accounting at the company and does not see any points requiring correction or correction.
A conditionally positive audit report is a letter in which the auditor generally approves the accounting system at the enterprise, but indicates that the accounting system gives some failures, which result in errors that, however, do not exceed the materiality threshold, that is, do not will lead to serious distortions of the reporting on the basis of which decisions are made.
The audit opinion may also be negative - in the event that the auditor has identified serious misstatements in the financial documents of the enterprise that affect the financial statements accordingly, and as a result, decisions made by the company's management on the basis of distorted financial data. In this case, the auditor should describe in detail all the errors and inaccuracies identified, express his opinion about the reasons for their appearance and possible solutions. When identifying any errors, even if administratively or criminally punishable, the auditor should not report them to the appropriate authorities - his task is only to convey information about the existence of any problems to the management of the company.
It should be noted that the auditor is responsible for the conclusion that he provided to the enterprise management upon completion of the audit. This means that if the auditor provided the wrong type of conclusion or indicated incorrect information that was used by the management of the firm and caused any loss, the firm has the right to file a claim with the audit firm to claim damages caused by the fault of the auditor who conducted the audit. Therefore, approaching the preparation of such an important document as an audit report is worth it in all seriousness, with full understanding that this document can become crucial for both the client company and the auditor conducting the audit.