Basic Elements of Auditor report
According to ISA 700, the auditor’s report includes the following basic elements, ordinarily in the following layout:
01. Title:
The title indicates the nature of the report. The title should be like “Auditor’s Report” or Branch Auditor’s Report”.
02. Addressee:
The auditor’s report should address the person to whom it is meant to be forwarded. Generally, the audit report is submitted to the board of directors or stockholders of an entity.
03. Opening or Introductory Paragraph:
The introductory paragraph should identify:
1. types of service performed (‘We have audited’).
2. financial statements audited.
3. dates of statements.
4. management’s responsibility for statements.
5. auditor’s responsibility for opinion.
04. Scope Paragraph:
The scope paragraph specifies the work performed by the auditor. The scope paragraph should indicate that the auditor had planned and performed the audit to obtain reasonable assurance whether financial statements are free from material misstatement. Specifically, the scope paragraph describes the audit as including-
6. examining evidence on a test basis,
7. assessing accounting principles used and significant estimates made by management,
8. Evaluating the overall financial statement presentation.
05. Opinion Paragraph:
The opinion paragraph of the report should state the auditor’s opinion as to whether the financial statements give a true and fair view in conformity with the financial reporting framework and comply with the statutory disclosure requirements.
06. Date of the report:
The date of the report should be the date when the auditor has obtained sufficient appropriate evidence to support the opinion. It should not be earlier than the date when management approves the financial statements.
07. Place of the report:
The town in which the audit report is signed should be indicated.
08. Auditor’s signature:
The report should be signed the personal name of the auditor or in the name of an audit firm or both.