- Accounting Basics
- What are Accounting Principles
- Accounting Equation Formula
- Accounting Cycle
- Accrual Accounting Basis
- Cash Basis Accounting
- Matching Principle of Accounting
- Conservatism Principle of Accounting
- GAAP (Generally Accepted Accounting Principles)
- Types of Accounting
- Materiality Concept
- Accounting Transaction
- Accounting Transactions Examples
- Going Concern
- Cost Benefit Principle
- Cost Principle
- Accruals in Accounting
- Accrual Accounting Examples
- Revenue Recognition Principle
- Prudence Concept in Accounting
- Cash Accounting
- What are Accounting Policies?
- Relevance in Accounting
- Accounting Methods
- Accounting Estimates
- Mark to Market Accounting
- Prior Period Adjustments
- Cash Accounting vs Accrual Accounting
- Accounting Controls
- Branch Accounting
- Nostro Account
- Accounting Information System (AIS)
- Break Even Point In Accounting
- Operating Cycle
- Fiscal Year
- Fiscal Year vs Calendar Year | Top Differences | Examples |
- Financial Reporting
- Financial Reporting Objectives
- Financial Statements
- Types of Financial Statements
- Components of Financial Statements
- Financial Statement Examples
- Accrual vs Provision
- Accrual vs Deferral
- Temporal Method
- Interim Financial Statements
- Pro Forma Financial Statements
- Consolidated Financial Statement
- Users of Financial Statements
- Financial Statement Limitations
- Objectives of Financial Statements
- Importance of Financial Statements
- Limitations of Financial Statement Analysis
- Objectives of Financial Statement Analysis
- Audited Financial Statements
- Financial Statement Audit
- Internal Audit vs External Audit
- Interim Reporting
- Accounting Scandals
- Quality of Earnings
- Audit Report
- Audit Objectives
- Audit Report Format
- Audit Report Types
- Internal Audit
- Audit Assertions
- Audit Report Contents
- Audit Report Examples
- Audit Report Qualified Opinion
- Audit Risk
- Sunk Cost
- Sunk Cost Examples
- Cash Receipt
- Fringe Benefits
- Money Measurement Concept
- Window Dressing in Accounting
- Manufacturing vs Production
- Leasehold vs Freehold
- IFRS vs US GAAP
- IFRS vs Indian GAAP
- Accounting for Fair Value Hedges
- Bookkeeping (52+)
- Balance Sheet (30+)
- Assets (109+)
- Liabilities (68+)
- Shareholders Equity (91+)
- Income Statement (158+)
- Cash Flow Statement (17+)
- Accounting Careers (27+)
- Accounting Books (8+)
- Budgeting in Finance (31+)
Audit Report Examples
An audit report contains the opinion of independent auditors about the company’s financial statements such as Income Statement, Balance Sheet, Cash flows and Shareholders’ equity statement. Auditor reports can be found in companies annual report just before the financial page.
There can be following variations in an auditor report opinion examples:
- #1 – Clean Opinion: If the auditor is satisfied with the financials and as per him/her these are of fair presentation.
- #2 – Qualified Opinion: In this type of report, the auditor will state limitation faced while auditing.
- #3 – Adverse Opinion: If the statements are not correctly stated.
Below are some practical examples and samples of the Audit Report to understand it better. These reports have taken from annual reports of companies:
Audit Report Example of Facebook
Below is the auditor report example for facebook which is U.S company so it should be compliant with GAAP rules. This report has been taken from the Facebook annual report for 2018. Auditor for facebook is Ernest &Young.
It has provided its audit report in 5 points which have been mentioned below:
#1 – Opinion on the Financial Statements
In the first paragraph, the auditor has mentioned they have audited balance sheet, Income Statement, Shareholder’s Equity, and Cash flow Statement of the company for the last 3 years. Also, they have checked all the related notes which explain the basis for the numbers and some accounting guidelines. Based on the audit, EY is confirming that financials are in accordance with GAAP (Generally Accepted Accounting Principles) standards. Based on the report they have provided an unqualified (clean) opinion that means auditor is satisfied with financials provided.
4.9 (1,067 ratings)
#2 – A basis for Opinion on Financial Statements:
In this part, auditor mentioned that in their audit they check to see any error, misrepresentation or fraud in the data provided. They have taken some test cases to check the amounts that are provided in the financial. Also, they have tested the accounting principles which was used by management.
#3 – Opinion on internal control over Financial Reporting
In this part, an auditor has checked whether the company is having control over its financial as regulated by COSCO (Committee of Sponsoring Organization) and PCAOB (Public Company Accounting Oversight Board). E.Y. has audited Income Statement, Balance Sheet, Cash Flow, and Shareholder’s Equity for this purpose.
#4 – The basis for Opinion:
Here auditor mentioned their process for forming the opinion. They have mentioned that formally audit has been done to confirm whether the control mentioned by management over the financial are reasonable.
#5 – Definition and Limitation of Internal Control Over Financial Reporting:
Here the auditor tells about the procedures which can be used for internal control such as “provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition” etc. Because of some limitation, there can be cases that even after adequate internal control there can be some misstatements. Auditor has also mentioned the same in this report.
Audit Report Example of Tesco Plc
Tesco is a multinational groceries company in the U.K. It is the third largest retailer in the world by revenue. Below is the snippet of auditor report for FY 18 which has been prepared by Deloitte. If we compare from the auditor report example for Facebook which has been mentioned above, the audit report example for Tesco seems to be more elaborative and larger in size and nature.
Below are some main parts of the sample audit report.
Opinion: As per Deloitte their financial statements and basis for statements are as per IFRS (International Financial Reporting Standards). For their auditing the have selected Group Income Statement, Group Statement of Comprehensive Income, Group and Parent Company Balance Sheet, Statement of Change in equity, Cash flow statement and related notes.
The basis for Opinion: In this part, auditors mentioned that conducted audit is in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable laws.
Summary of audit approach: In this part, at first auditor specified the key matters for audit which are-
- Store impairment review;
- Recognition of commercial income;
- Inventory valuation;
- Pension obligation valuation;
- Contingent liabilities;
- Presentation of the Group’s income statement;
- Retail technology environment, including IT security and formed their opinion on the above matters. Also, they provided their scoping of the audit.
Conclusions relating to going concern: In this part Auditors have reviewed the statements that have provided by the Directors of the company. As we know that an organization is meant to be a going concern. So, auditors are checking here whether the directors have used the accounting standard keeping in mind that the company is a going concern. Also, auditors have checked the uncertainties and company’s ability to continue for at least the next 12 months forward. As per Deloitte, they have nothing to add or draw attention related to that
Principal Risk and Viability Statement: In this portion, Deloitte mentioned their views on what kind to risks and statements are mentioned by directors and how they are being mitigated. Auditors have checked the statements of Directors that how the prospects of groups are assessed by them and for that what and how they have taken the time frame. Auditors also want to examine whether the Directors have an explanation on how the liabilities of companies will be met by the firm in the future. Auditors want the Directors to disclose about any such liabilities which can have an issue in the future. Based on that they prepare a report. Deloitte confirms that they have nothing material to report.
Above we have taken an audit report sample example of one US company which is compliant as per GAAP and one UK company which is as per IFRS compliant. Though the principal of both the reports is same the report for UK company is showing elaborative information and providing the explanation of all the key audit matters which should be quite helpful in making an independent view of the firm by an analyst.
This has been a guide to Audit Report Examples. Here we discuss Types of Audit report opinion and Sample Audit Report examples including Facebook, Tesco Plc. You can learn more about financing from the following articles –