Auditor's Report

A Basic Guide


The Auditors Report verifies the validity of the annual financial statements of a company. It is a statement issued by the Auditors, after having examined the books. This report states whether or not, in their ethical opinion, the presented figures are a true reflection of the real financial position of the company.

The Report is an essential component of a company's annual financial statements.

What it tells you

Auditors must make a statement in writing after having examined the books of a company. This report is a component of the Financial Statements. Its function is to state that:

The annual financial statements of the company are valid;

The annual financial statements of the company fairly reflect the company's financial position and results of operation for the period reported on.

In order to perform the above the Auditor will have to verify that:

The company has maintained proper accounting records throughout the financial year

The directors' minute books and attendance registers for meetings are in order.

The company's securities are in order

The director's reports are correct and do not distort the company's position as stated in their reports

All assets and liabilities are valid

Who uses it & why

Directors within the company and external users such as shareholders, banks and Inland Revenue require Auditor's Reports.

All companies financial affairs are required to be examined by independent auditors, qualified and registered. Authenticity is rendered to a company's financial statements if it is accompanied by the Auditors Report.

Audit Reports: Glosssary of Terms

Unqualified Report

This report contains no derogatory remarks. However, should the Auditors be unable to comment in an Unqualified Manner regarding the company's affairs, they may give one of the following opinions:


It is one which contains an adverse comment regarding the financial affairs of a company, e.g. the solvency of this company relies on the continued commitment of the Directors.


Where the Auditor cannot guarantee the correctness of the presented figures. They therefore disclaim any right to say whether or not the presented statements are a ture and fair reflection of a company's position, e.g. Stock Value has not been verified or Inland Revenue is currently investigating the affairs of this company.


Is some sort of qualification to otherwise clear statements, certified by the Auditors to be correct, provided certain specified details being taken into account, e.g. this company is reliant on a current contract with XYZ. In the event of losing this contract it will have an effect on the liquidity of this company.

The auditors name, address, telephone number and qualifications must be reflected on a formal letterhead. The report must be supported by his signature.

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