An auditor’s report is a written opinion released by an auditor or audit firm that provides an analysis of an organization’s financial statements and accompanying disclosures used in the annual financial reporting process Auditor’s reports are used to give stakeholders and interested parties an independent and professional opinion on an organization’s financial statements.
Auditor’s reports are used to ensure financial statements like balance sheets, income statements, and cash flow statements accurately portray the financial activity of a business in a given period of time. While the financial statements are prepared by management, the auditor’s report is issued after a professional audit has been conducted by an independent, third-party audit firm. As such, the auditor’s report is important for investors, lenders, regulators, and other stakeholders to accurately assess the financial condition of an organization.
The five best examples of auditor’s reports include:
1. Unqualified Opinion: A “clean opinion” or “unqualified opinion” is the highest possible opinion an auditor can give and states that the financial statements have been presented in accordance with the applicable financial reporting framework.
2. Qualified Opinion: A qualified opinion expresses a limitation on the scope of the audit report or a disagreement with management’s application of accounting principles. This could be due to inadequate information or incomplete records.
3. Adverse Opinion: An adverse opinion indicates that the financial statements are so misstated that it does not present a fair and accurate view of the financial activities of the business.
4. Disclaimer of Opinion: In some cases, the auditor may be unable to form an opinion, or have sufficient information or evidence to provide an opinion on the financial statements.
5. Modified Opinion: A modified opinion may include a note that expresses a limitation on the scope of the audit or an opinion that is “qualified” or “adverse.” A modified opinion raises some level of concern, but is not serious enough to warrant an adverse opinion.