Key Takeaways
- An audit report is a document that presents the findings of an external audit, including the auditorโs opinion on the financial statementsโ fairness and accuracy.
- An audit certificate is a document issued by an auditor as a formal statement of their opinion on the accuracy of the financial information presented.
- The audit report provides a detailed analysis and explanation, while the audit certificate is a concise summary of the auditorโs opinion.
What is an Audit Report?
After carefully examining the companyโs books and records, an auditor will indicate in an audit report whether or not the books and records give a truthful and fair picture of the companyโs financial status. A clean report indicates the auditor is satisfied with all material aspects. At the same time, a qualified, unfavorable disclaimer or a reservation of opinion on any point must be accompanied by an explanation of the auditorโs thinking.
The result of any audit is always a report. This delivery is made available to the client after completing the audit. Without the auditorโs end submitting an audit report, the audit procedure cannot be properly ended.
Simply put, itโs a document that summarises the auditorโs findings from a study of the financial accounts of a particular organization. It is crucial to the auditing process and cannot be skipped. Since it contains the auditorโs view on the companyโs books, it is relied upon by many parties interested in the companyโs financial health.
This report needs to be written such that the average person may understand it. In addition, it has to be clear so that shareholders and other interested parties have better knowledge and protection. If the auditorโs report contains any reservations or criticisms of the companyโs operations, they must be presented to the shareholders at the annual meeting.
What is an Audit Certificate?
An audit certificate is a written or spoken statement issued by an auditor attesting to the accuracy of data specified by the customer. The auditor does not offer an opinion or estimate of the correctness of an audit certificate. The auditor assumes legal responsibility for the information in an audit certificate since he or she attests to its integrity.
The financial statements are guaranteed to be correct. This certificate verifies the authenticity of the financial statement. Accordingly, the auditor must verify the accuracy of every piece of information contained in the statement before certifying it. The auditor who signs or issues the certificate is effectively vouching for the integrity of its claims.
ย It is also the auditorโs responsibility to insist that the certificate was issued at the companyโs request and is valid solely for the specified use or submission to the designated authority. The auditorโs certificate should be addressed to the customer, the Public Authority, or whoever requests it. Itโs acceptable to address it โto whomsoever it may concernโ in certain circumstances.
Difference Between Audit Report and Audit Certificate
- An audit report is an auditorโs opinion about the accounts, whereas an audit certificate is a confirmation of the accuracy and correctness of matters.
- An audit report is based on assumptions and estimations, whereas an audit certificate is based on actual figures and facts.
- The scope of an audit report is enormous, while the scope of an audit certificate is limited.
- An audit report is less reliable than an audit certificate because it does not guarantee accuracy and correctness.
- The law provides the format for an audit report. On the other hand, an audit certificate has no standard format.
- Auditors canโt be held responsible for their audit reports, whereas they will be held responsible for their audit certificates.
Comparison Between Audit Report and Audit Certificate
| Parameters of Comparison | Audit Report | Audit Certificate |
|---|---|---|
| Meaning | Expression of opinion about the account. | Confirmation of the accuracy |
| Basis | Assumptions and estimations | Facts and figures |
| Scope | Large | Limited |
| Reliability | Less | More |
| Format | Prescribed by law. | No standard format |
| Responsibility | Auditors canโt be held responsible. | Auditors will be held responsible. |
- https://www.jstor.org/stable/239433
- https://egrove.olemiss.edu/cgi/viewcontent.cgi?article=1132&context=dl_proceedings
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
