Analysis
Analysis
Definition
An audit report is a written opinion of an auditor regarding whether an entitys financial present fairly its financial position. This is written in a standard format, as mandated by generally accepted auditing standards (GAAS). GAAS requires or allows certain variations in the report, depending upon the circumstances of the audit work that the auditor engaged in. For example, the report may include a qualified opinion, depending upon the existence of any scope limitations that were imposed upon the auditor's work.
I.
Unqualified Opinion
Often called a clean opinion, an unqualified opinion is an audit report that is issued when an auditor determines that each of the financial records provided by the small business is free of any misrepresentations. In addition, an unqualified opinion indicates that the financial records have been maintained in accordance with the standards known as Generally Accepted Accounting Principles (GAAP). This is the best type of report a business can receive. Typically, an unqualified report consists of a title that includes the word independent. This is done to illustrate that it was prepared by an unbiased third party. The title is followed by the main body. Made up of three paragraphs, the main body highlights the responsibilities of the auditor, the purpose of the audit and the auditors findings. The auditor signs and dates the document, including his address.
II.
Qualified Opinion
In situations when a companys financial records have not been maintained in accordance with GAAP but no misrepresentations are identified, an auditor will issue a qualified opinion. The writing of a qualified opinion is extremely similar to that of an unqualified opinion. A qualified opinion, however, will include an additional paragraph that highlights the reason why the audit report is not unqualified.
III.
Adverse Opinion
The worst type of financial report that can be issued to a business is an adverse opinion. This indicates that the firms financial records do not conform to GAAP. In addition, the financial records provided by the business have been grossly misrepresented. Although this may occur by error, it is often an indication of fraud. When this type of report is issued, a company must correct its financial statement and have it re-audited, as investors, lenders and other requesting parties will generally not accept it.
IV.
Disclaimer of Opinion
On some occasions, an auditor is unable to complete an accurate audit report. This may occur for a variety of reasons, such as an absence of appropriate financial records. When this happens, the auditor issues a disclaimer of opinion, stating that an opinion of the firms financial status could not be determined.
2) The company prepares and maintains proper books of accounts as per the provisions.
3) The Balance sheet as well as Profit & Loss A/c have been prepared vertically.
4) The Balance sheet as well as Profit & Loss A/c have been prepared on 31st March 2011.
5) For the purpose of audit the auditors had been given an opportunity to exercise all their rights as an auditor. The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis except in case of uncertainties.
6) The company prepares and maintains proper books of accounts as per the provisions of section 209 of the Companies Act 1956. The audit reports shows that all significant accounting policies have been adopted in preparation and presentation of the financial statements and have been properly disclosed in the annual report.
7) The comparative positions of each account of the balance sheet as on 31 March 2010 and March 2011 have also been disclosed.
8) The company has not made any allotment of shares to any concerned party.
9) The company has not raised any money by public issues during the year.
10) In the Balance sheet, Sources of funds = Application of funds, based on Dual aspect concept of accounting.
11) The Profits of the company have been increased substantially from 2010 to 2011 as evident from the comparative Profit and Loss A/c provided.
12) The Earning Per Share(EPS) (shares with face value Rs.1) has increased from Rs. 3.18 per share in 2010 to Rs.4.75 per share in 2011 as evident from the comparative Profit and Loss A/c provided. 13) As per the analysis of the auditors report, proper books of accounts have been maintained by the company and the financial statements dealt by the auditors are in agreement with the books of accounts.
14) On analyzing the Balance Sheet it can be found that investments worth Rs. 90516.49 lakhs have been purchased during the current year.
15) According to the auditors report the balance sheet gives a true and fair view of the state of the affairs of the company and the profit and loss account gives the true and fair view of the profits of the company, and they comply with the accounting standards.
16) The Balance Sheet as well as Profit & Loss A/c has been signed by the preparers and the auditors respectively.
WEBLIOGRAPHY
A. www.ashokleyland.com B. www.wikipedia.org C. www.blurtit.com