What is a Financial Statement Audit?

A financial statement audit provides reasonable assurance that the financial statements of a business entity are presented fairly. The financial statement should be unbiased, neutral and in compliance with generally accepted accounting principles (GAAP).

 

Who Needs the Financial Audit?

An audit helps the owners, shareholders, investors, and other users of the financial statement of an entity by providing reasonable assurance that the financial statements are fairly stated. This enables users to make confident decisions based on the financial statements.

 

What Makes an Audit Report?

Typically the audit report includes the following:

  • Introductory Paragraph

  • Scope Paragraph

  • Executive Summary

  • Opinion Paragraph
  • Auditor’s Name and Signature

There are four types of opinions that CPA’s render when concluding an audit of the company’s financial statements.

Unqualified Opinion

If the CPA finds no serious problems, he or she gives the business’s financial statements an unqualified opinion. For example, the financial statements fairly represent the financial position, results of operations, and changes in financial position in accordance with GAAP.

 

Qualified

The auditor’s report may point out one or more departures from GAAP, but the organization’s financial statements are otherwise free of material misrepresentations.

 

Disclaimer

An opinion could not be rendered due to missing financial records or other reasons.

 

Adverse

The financial statements do not fairly represent the financial position, results of operations, and changes in financial position in accordance with GAAP.

 

 

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