The audit report details the financial statements of a company. This report is written in the opinion of an auditor on the audited process. A financial report or process is examined, inspected and evaluated by an auditor or an employee of a company.

Audits ensure that businesses comply with the laws and regulations, and they also determine if financial information is recorded accurately. The audit can help identify fraud and risks. It can help identify whether controls are effective in managing future threats, or weaknesses within the business process.

A good audit report should be thorough and concise. Each section must be comprehensive and contain only relevant and factual information. The auditor may create tables, graphs or bullet-point information when necessary.

How to Write an Audit Report

Each audit must have a set structure. Not only the initials but also the full name of each auditor must be listed. The management's and auditor's responsibilities should be listed at the beginning. It is important to write the actions that were taken during the auditory in the past. The audit report should include the following sections:

  • Scope of objectives
  • Summary
  • Conclusions Original: Utilize Paraphrased: Use
  • Opinion
  • Basis for an opinion
  • Suggestions

Scope of objectives

The scope and objectives can be defined after a discussion between the auditors and business managers. In the audit report, the audit purpose and the extent of examination must be stated. How many years will the files be evaluated? What departments? The auditor may have to confirm the use of resources by the business and review current policies in order to satisfy the scope. The scope and objective of an audit will depend on its type.

For a tax audit, the auditor must make sure that all accounting records and books are maintained correctly. To perform a process-based audit, it is necessary to provide assurances about the effectiveness and efficiency of the business's processes and systems. Scope and objectives may be determined per audit or after the schedule for the audit has been established.


It should summarise the audit report's content. The executive summary is typically 1 to 2 pages long and includes the main sections, as well as definitions. Bullet points can be used to present information in a concise and clear manner. A table could be used by the auditor to highlight important risks and issues, as well as how and when controls should be implemented. Remember that the people who will be reading this section need to have accurate and concise information.

Results Original

An auditor's evaluation will allow them to draw conclusions about the business after they have examined the practices and activities. The findings of an audit could reveal faults in the company, depending on its nature. The audit could reveal that employees are recording unapproved overtime or that internal controls have significant flaws. The audit can reveal other risks like fraud, lack policies and procedures or employees gaining unauthorised information.

Auditors may give opportunities for improvement in their audit reports. These feedbacks could help businesses avoid future non-compliance. The auditor offers ideas to improve the business system and provides a third party perspective. The OFI shouldn't be written authoritatively. Instead, it should describe the affected area and the possible actions.

The auditor must also describe how they came to their findings, the actions taken and the data they looked at. The auditor will also need to explain the findings they made, their actions and data they used.

The auditor's findings can be both positive and negative. The auditor might find that a business keeps proper records and complies with all applicable laws. The audit report opinion will make this clear.


The auditor's opinion is based upon their observations throughout the process.

Auditors can form four different types of opinions.

  • Unqualified Opinion
  • Qualified opinions
  • Disclaimer
  • A negative opinion

Unqualified Opinion

A clean report or unqualified opinion is a statement that an auditor is satisfied with the business practices and financial information recorded. The most common report type, it's the one that companies want because it shows there are no problems with the financial statements. If the bank receives a report with no qualifications, it confirms that all information has been presented accurately. This will increase the likelihood of the bank lending money to the business. The organisation is assured of its compliance and will have few issues. Investors will also be pleased to see that the company is ethical and is a good investment.

Qualified opinions

The auditor's opinion is qualified when he or she is not fully satisfied with financial procedures at a business. The company may not be following the standards set by the country when it comes to reporting information. The audit may have been limited. The auditor may have not found enough data or documents to meet a specific objective.

The qualified opinion is a statement that indicates an issue which may not be widespread, but it could cast doubts on the accuracy of the company's statements and practices. This opinion type is not detrimental to business because it can be changed in the future once the auditor has described the issues.

A negative opinion

A negative opinion is when the auditor does not approve of the financial statements that have been provided by management. The auditors have discovered evidence of financial misstatements and irregular records. These issues indicate that there is a serious problem within the company. The fact that the data is not accurate is a red-flag for fraud in the organization.

The last thing you want is a negative opinion. It can have a detrimental impact on the company, including its outlook, ability to raise money and the ability to attract new investors. The company's reputation, stock prices and morality can be affected by this.


The auditor's disclaimer may be for a variety of reasons. The auditor may not have had access to enough or the correct documents. There are questions the auditor is still unable to answer due to lack of evidence or a company that does not cooperate. It is not a negative or positive opinion. This opinion can be interpreted as a negative one, since it is not a definitive answer.

Investors and lenders may be less confident in a business. The auditee, in certain situations, can sue an auditor who disagrees with his opinion.

Results of a Process Audit Report are:

  • Compliant
  • Minor Non-Compliance
  • Non-compliance with major regulations


It is the same as a non-qualified opinion. It is a sign that all systems, processes and policies adhere to requirements and policies. They comply with the laws and are effective and efficient. It is not a negative to have a Compliant' opinion if there are improvements that can be made.

Minor Non-Compliance

A minor non-compliance equates to a qualified opinion. It is likely that the audit report found minor non-compliance with policies or requirements. A minor non-compliance can be a poorly implemented procedure with little impact on the business and no breach of laws, regulations or standards.

If the audit is related to a certification, then the certification will remain as long as the issues are corrected by the next audit. If it is a certification audit, they will keep their certification as long as they correct the problem by the next inspection. The certification can be suspended, if the company fails to meet all the requirements. This can lead to a deeper investigation into the reasons for the non-conformance and what steps can be taken to prevent it in the future.

Non-compliance with major regulations

A major non-compliance can be compared to a negative opinion. The audit will find that the process or processes being audited are seriously and substantially deficient in comparison to the policy and requirements. Minor compliances can lead to major nonconformance.

A major non-compliance example is when a company does not follow their standard operating procedures in building their products, causing defects and damaging the reputation of their business, or if they violate applicable laws, regulations or standards. If this is a certification-related audit, certification would be suspended until they're rectified. If there is a major problem with the company's compliance, an investigation will be conducted to determine the cause. The company will waste time and money trying to fix the problems and prepare for the next inspection.

Basis for an opinion

This section should state that the review was done in accordance with auditing requirements of the country wherein the company is located. It can also list the responsibilities that each party is expected to fulfill under these standards.

They should also explain which accounting principle applies to their audit. The auditor should describe the accounting principles that apply to their audit. The auditor may also explain the extent to which the opinion was formed, i.e. the documents they examined to reach that conclusion. The auditor must mention that if the audit is external, they are not acting on behalf of the business.


After the audit, management is given recommendations. While they aren't mandatory, once made, the manager must follow the auditor's advice as he or she has already taken a pledge before the inspection. The recommendations are meant to be implemented by the company in order to improve compliance and correct any nonconformities within the organization. The business must act promptly after receiving the audit recommendations in order to make the audit beneficial.

The main objective of the recommendations is to improve and manage risks. Management must not only follow the advice given by the auditor but also monitor their own actions and internal control. It is important to know who will be responsible for the necessary changes in order to improve communication and achieve better results.

The audit report should end with the auditor's name, date of report, and auditor's home address. Reference section is needed if an external source was used.

In conclusion

Only a properly performed audit can produce an effective audit report. The auditor will need to have access to all pertinent files and the appropriate space within the organisation. To ensure that the audit is completed on time, the organisation must be prepared to give any additional documentation required. A good relationship between the auditors and auditees is essential to produce an audit report of high quality. A report on an audit will be different depending on which type of audit is performed. Some sections, however, are consistent.

The business and auditor must work together to get the best results and reduce risks.


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    I am a 32-year-old educational blogger and student. I love to share my knowledge and experiences with others through writing. I believe that knowledge is power, and I am passionate about helping others learn and grow.