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Difference between Audit Report & Audit Certificate

Audit Report
1. A report would be slightly more
comprehensive. It would include the
work done by the assurer, their
findings and their results. Again a
report may be for a specific area /
item etc.
2. The report is based on assumptions
and estimations
3. The report is actually an opinion by
the auditors and does not guarantee
the accuracy of the accounts.
4. The reports results in limited
responsibility for the auditor
5. Auditor Report is not a guarantee of
the absolute correctness & accuracy
of the books of accounts.
6. Auditor Report is later on found to
be wrong, he cannot be held
responsible since he has given
merely his opinion on the state of
affairs of the company.

Audit certification
1. A certificate would be more specific.
For example certifying the sales of
an outlet etc. This means that the
assurer has only checked and
certified the items or numbers
appearing in the certificate.
2. The certificate which is based on
actual figures and facts.
3. The certificate is a formal statement
by the auditors which guarantee the
accuracy of the accounts.
4. The certificate, since it is a duly
signed formal statement implicates
total responsibility for the auditors.
5. the auditor certificate serves as a
correctness & accuracy of the books
of accounts
6. if the duly signed certificate is found
as wrong, he will be held responsible

Types of Audit Opinions

An audit opinion is expressed on audited statements.
Types of Audit Opinions
1. Unqualified opinion the unqualified opinion has no reservations
concerning the financial statements. This is also known as a clean opinion
meaning that the financial statements appear to be presented fairly.
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
2. 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.
3. Disclaimer 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.
4. 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.

Basic elements of audit report;

Basic Element of an Audit Report
1. Title: The title indicates the nature of report.
2. Addressee: The auditors report should address the person to whom it is meant
to be forwarded.
3. Opening (or) introductory paragraph
1. Identification of financial statements audited.
2. A statement on the responsibility of the entitys management and that of
4. Scope paragraph
1. A reference to the auditing standards generally accepted in BD.
2. A description of work performed by the auditor.
5. Opinion paragraph
1. A reference to the financial reporting framework used to prepare the
financial statements.
2. Expression of opinion on the financial statements
6. Date of the report: The date of report indicates the date on which the auditor
signs his report.
7. Auditors signature: The report should be signed by the auditor in his personal
Sometimes, the governing enactments may require of certain statements (or)
matters in (or) with the auditors report. In such cases, the auditors report include
all those matters in addition to the matters as specified in AAS above.
A good report must at least meet the following qualifications:
1. It should be based on the factual information.


It should be convincing
It should be forceful
It should be unbiased
It should point out mistakes
It should be a constructive criticism and not be in reprimanding tone
It should offer constructive and timely suggestions to management.
It should be brief. If it is lengthy, the object of the report is defeated even if it
is well written.

Contents of Audit Report

Audit report should contain the following things.
1. Answer, clarification and explanation of furnished questions are given by the
concerned authority satisfactory or not.
2. Income statement and balance sheet is prepared by the company in
prescribed structure or not.
3. Accounts are maintained as per the provision of laid down rules and
regulations or not.
4. Balance sheet of the company presents true and fair view of financial position
or not.
5. High ranking official, representatives and staffs of the company have
performed work as per the provision of rules and regulations or not; they
have committed fraud or not.
6. Transactions of the company are satisfactory or not.
7. Auditor should provide suggestion if necessary.

In addition to above facts, an auditor should include other facts using his own
discretion. Other facts which are to be incorporate in the report are given below:
1. An auditor should include all the facts demanded by the Company Act.
2. Auditor should include the true and fairness of books of accounts as well as
facts where he is not able to satisfy himself.
3. Auditor should include all the important facts which directly affect the
financial position of the company.
4. An auditor should include in the report that the audit of books of account is
made in detail or applying test check.
5. If there is special situation, an auditor should include it in the audit report.
6. If auditor detects any frauds and errors during the course of audit, he must
include in audit report clearly stating their effect in financial statements.