Tuesday, 1 November 2011

Explain the meaning of audit report and explain the points of qualified and unqualified report

Auditor's independent opinion regarding the account examined by him is called audit repot.
Report writing is very important function which is performed by the senior auditor. After conduction and audit the auditor of a company has to write a report to the share holders. It is from the auditor to his client.

A report in which auditor gives his opinion that he is fully satisfied with the books of accounts and there is no any objectionable point in them is called clean or unqualified report.

Following are the main contents of unqualified report according the companies ordinance :

1. Keeping Of Books :-
Auditor gives his opinion that proper books of accounts required by companies ordinance have kept been by the company.

2. At Information Obtained :-
Auditor declares in the clean report that all the necessary information and explanations which were required for the purpose of audit has been obtained.

3. Expenditure For Business :-
Auditor gives his opinion about the expenditure that it was used for the business purpose of the company.

4. View About Balance Sheet :-
According to his opinion balance sheet presents a true and fair view of the company's affairs and financial position according to his knowledge.

5. Confirmation With Ordinance :-
Auditor also gives his opinion that the profit and loss accounts have been drawn up in conformity with the companies ordinance.

6. Expenditure According The Object :-
Auditor also gives his opinion that expenditure and investment made during the financial year was made according the objects of the company.

7. Deduction Of Zakat :-
According to his opinion under the Zakat and Ushar ordinance proper amount of Zakat was deducted and deposited in the central Zakat fund.

Annual report of the auditor which contains previous discrepancies or errors discovered by the auditor during the audit is a called qualified audit.
In case of qualified report auditor is not satisfied with the information and explanations given to him.
This report may be in respect of the many points like the following :

1. Provisions made for bad debts and depreciation are not sufficient.

2. Investment have been valued at cost price which is in excess of market prices.

3. The stock in trade has been valued at market price which is more than the cost price.


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