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An audit report is a written opinion of an auditor regarding an entity's financial statements. The report is written in a standard format, as mandated by Malaysia Audit Act 1957. When a Company preparing financial statements for completion, they often must contain an auditor's report from an external accountant or auditor. This document evaluates the financial statement's validity and reliability.
An auditor's report is ultimately intended to provide reasonable assurance that there are no material errors within an organization's financial statements. Auditor's report is useful when the companies are going to loan fund from third parties such as government, bank or new investor.
In addition, relevant authorities required every local company to complete their audited account and lodge in with annual return each calendar year. Submission of tax also replies upon on audited account.
Preparation of the auditor's report
After auditing an organization's financial statements, the auditor will prepare their own report where they share their opinion about the validity and reliability of the financial statements.
The auditor is expected to provide a true picture of the organization and their financial statements. In the report, they must also state their connection to the financial statements, as well as whether they work for the company externally or internally.
The auditor can also express any reservations or additional information that they may have in the auditor's report. For example: if the auditor disagrees with the organization about the valuation of an asset, and they believe that this has a substantial impact on the financial statements, they should state this in their report.
The following report variations may be used by a licensed auditor:
1. A clean opinion, if the financial statements are a fair representation of an entity's financial position.
2. A qualified opinion, if there were any scope limitations that were imposed upon the auditor's work.
3. An adverse opinion, if the financial statements were materially misstated.
4. A disclaimer of opinion, which can be triggered by several situations. For example, the auditor may not be independent, or there is a going concern issue with the auditee.
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