What is an Auditor's Report?

An auditor’s report is referred to as a written letter that an auditor prepares. It consists of his opinion on whether the financial statement of the company is complying with the foundation policies or not. Such a report also states that the statement is completely free from misstatements.

Typically, this type of report can either be external or independent. It gets published on the Annual Report of the company. The importance of an auditor’s report comes from the fact that creditors and banks look into it before lending anything to the firm.

Understanding Auditor's Report

An auditor’s report generally comes with the financial statements of the company that outlines its view on the compliance of the company with the basic Accounting practices. This report is needed while putting forth the Earnings.

However, this letter is not an assessment of whether the firm could be an adequate investment. Also, this is not even an analysis of the earnings performance of the company within a period. Rather, it is just a measure stating that the financial statements of the company are reliable.

What Does an Auditor's Report Contain?

In the form of a letter, an auditor’s report generally comprises the below-mentioned sections and pointers.

• The first paragraph talks about the responsibilities and liabilities that the directors and auditor have.
• In the second paragraph, the scope is outlined that states the specific accounting practices that were used while creating the report.
• In the last paragraph, the auditor adds his opinion.

How Does an Auditor's Report Look Like?

Generally, an auditor’s letter carries the following excerpt to define the reliability of a company.

*"We have audited the associated joined balance sheets of ABC Corporation and its subsidiaries (the 'Company') as of September 30, 2020, and September 30, 2019, the related joined statements of earnings, comprehensive Income, equity, and cash flows, for each of the two years in the period ended September 30, 2019, and the related notes (collectively referred to as the 'financial statements'). In our opinion, the financial statements present impartially, in all material respects, the financial position of the Company as of September 30, 2020, and September 30, 2019, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2019, in conformity with accounting principles generally accepted in India.”*