A company’s financial health is easily identifiable through accurate financial statements. However, how can you verify whether or not the data you see in your company’s financial statements are true?
This is where an auditor’s report comes in – a document evaluating and stating the validity and reliability of your financial statements.
How is an auditor’s report prepared? What are its elements? Read on to learn the content of audit reports and what it means for your company.
An auditor, also called a controller, is the person who can vouch for the accuracy of your financial reports. This is why small business auditing is vital for your business. Auditors can be either internal or external; the former being employees or contractors working for the company they are auditing, and the latter mainly working for government agencies. It is advisable that auditors state their connection with the company (internal or external) so that the report will not be compromised.
Like all financial and accounting documents, an auditor’s report should adhere to the established standards of a local governing body. It could be based on the standards of the Generally Accepted Accounting Principles (GAAP), for example, to ensure that the auditor’s evaluation of accuracy is based on standard accounting practices.
In audit reports, there are also rules on the order of elements:
An auditor’s report is also known as an opinion. It has different natures depending on findings. There are four types of opinions expected when seeking professional corporate auditor support, such as:
For you to have a good or unqualified opinion, you need to present credible financial statements, which in turn can give assurance to bankers, creditors, stockholders, government agencies, and other interested parties. By regularly auditing your finances and financial statements you are positioning your company as credible within your industry – allowing you to attract more business and drive your company’s growth.
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This post was first published on 30 October 2014 and edited 27 October 2023. Edited by: Aly Tagamolila