Memorandum of association

75.Unqualified/ Clean/ Fair report:
When an auditor is satisfied with the fairness of the balance sheet and profit and loss account he will give a clean report. The auditor makes various statutory affirmations without reservations He is said to have the given an unqualified report on financial statements of the company.
Even when an auditor has given a clean report, it does not mean that it is absolutely accurate in other words the auditor is not guarantor of insurer as is observed by
Lord Justice lopes in re. Kingston cotton mills co. Ltd. Case, “auditor must not be held liable for not tracing out ingenious and carefully laid schemes or fraud, when there is nothing to arose their suspicion.”
50
Qualified Report:
If the auditor is of the opinion that the balance sheet does not give the true and the fair view of the state of company’s affairs or, that profit and loss account does not give true and fair view of the profit or loss for the year he must qualify his report accordingly. When an auditor concludes on the basis of sufficient appropriate audit evidence that mis-statements are material but not pervaise to the financial statements or he is unable to obtain sufficient or appropriate evidence to conclude that financial statements are free from material mis-statements, such mis-statements remaining undetected may be material but not pervaise.