Independent Auditor Report

What is the Independent Auditor Report?

An independent auditor report is a report which is given by independent auditor after examination of financial statement, books of accounts, financial transactions, accounting practices, internal and external control of an organization.

An Independent auditor is an independent person who is not associated with the company by any means and who is appointed by the company with the consent of the board of directors he may be a Chartered accountant or certified public accountant.

Independent Audit Report

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Types of Independent Auditor Report

There are two types which are as follows –

Types of Independent Audit Report

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#1 – Unmodified Report

The unmodified report is also called an unqualified report or clean report. The unmodified report is issued by the auditor when the auditor is satisfied with the financial statementFinancial StatementFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all more that it is presenting the true and fair value of the business operation. It gives confidence to the investors, shareholdersShareholdersA shareholder is an individual or an institution that owns one or more shares of stock in a public or a private corporation and, therefore, are the legal owners of the company. The ownership percentage depends on the number of shares they hold against the company's total more so that they can decide based on the Independent Auditor Report.

#2 – Modified Report

It is issued when Independent Auditor is not satisfied with the financial statement or not able to obtain sufficient and appropriate evidence to believe that financial statement is free from any misstatement.

There are three types of Modified Report which Auditor gives:

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Below is the format of Independent Auditor Reports –

  1. Title – The title of all the independent auditor reports is the same as “Independent Auditors’ Report.”
  2. Addressee – Addressee means the persons to whom this report will address or receiver of this report. The addressee can be the board of directors or shareholders of the company, or any other person depends on the nature of auditors’ reports.
  3. Responsibility of the Management and Auditor – In this paragraph, auditors and management responsibilities will be defined, like auditors will give an unbiased report after examination of financial statements.
  4. Scope of the Audit – In this paragraph, the auditor mentioned the scope of an audit like audit was conducted as per generally accepted auditing standard.
  5. The Opinion of the Auditor – In this paragraph auditor gives his opinion based on examination of financial statements. There are four types of opinions that auditorsAuditorsAn auditor is a professional appointed by an enterprise for an independent analysis of their accounting records and financial statements. An auditor issues a report about the accuracy and reliability of financial statements based on the country's local operating more give, which is already described in the type of Auditor reports. It is the primary and most crucial paragraph of the Auditors’ report.
  6. Basis of the Opinion – In this paragraph, the auditor provides facts and grounds on which he has given his opinion.
  7. Other Reporting Responsibility – In this paragraph auditor mentioned any additional responsibility, which is apart from his primary responsibility.
  8. Signature of the Auditor – The partner of the audit firm, which is appointed by the company, will sign the audit report.
  9. Place of Signature – Here Auditor has to mention the name of the city where the audit report will be signed by the auditor.
  10. Date of Audit Report – The date of the audit reportAudit ReportAn audit report is a document prepared by an external auditor at the end of the auditing process that consolidates all of his findings and observations about a company's financial more is the date on which the auditor will sign the audit report.



  • It is an extra cost to the company, and sometimes it becomes a costly affair for small business organizations.
  • Sometimes employees got harassed and not expressed their new ideas if they have more fear for audit.
  • If the auditor does not give the correct opinion in his audit report, then there may be a chance that management will take wrong action and decisions.
  • Auditors must have a good knowledge of business nature and business processes; otherwise, this will impact the audit report.


Independent Audit Report is nothing, but it is an opinion that is given by the independent auditor after examination of books of accounts, business transactionsBusiness TransactionsA business transaction is the exchange of goods or services for cash with third parties (such as customers, vendors, etc.). The goods involved have monetary and tangible economic value, which may be recorded and presented in the company's financial more, accounting policies & practices, and internal control adopted by the company. Independent Auditors’ report is an essential requirement of banks and creditors for lending loans to the company.

There are a specific format and content of the Independent Auditors’ report, which Auditors’ has to maintain. Independent Auditors’ report is good for the company because the external and independent party gives it. Therefore, it is unbiased and provides a clear picture of the organization. However, at the same time is very important that management should give actual, correct, sufficient, and appropriate evidence; otherwise, it will misguide the auditor and his report.

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