Different Types and Uses of Audit Reports
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Please discuss the following:
a. What are the different types of audit reports and when should each be used?
b. In what types of situations would an auditor be allowed to issue an unqualified audit report?
c. To what extent is the auditor liable for misstatements in the financial statements of the audited company?
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a. What are the different types of audit reports and when should each be used?
Audit reports are a formal opinion or disclaimer issued by an auditor. These reports help in reporting financial information to the users such as investors, government, trade creditors, bankers, management, etc and advise them whether the financial statements are in accordance with GAAP or not.
In other words, we can say that these reports help the users in identifying the trustworthiness and material correctness of the financial statements of the company.
There are four types of audit reports: An unqualified audit report, a qualified audit report, a disclaimer audit report and an adverse audit report.
1) Unqualified report: This is the most common type of audit report and it indicates that the auditor has no doubts about the fairness of the presentation of financial statements. Moreover, it also shows that the audit is performed in accordance with the Generally Accepted Auditing Standards and the PCAOB. This report is used when the ...
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