4 Types of Audit Report

Types of Audit Report

There are four types of Audit Report. They are—

  1. Clean Report
  2. Qualified Report
  3. Disclaimer
  4. Negative Report

They are briefly explained as follows.

1. Clean Report

If the auditor has no reservation in respect of matters presented in the financial statements, he gives a clean report. He states that

the financial statements give a true and fair view of the state of affairs and profit and loss account during the period.

2. Qualified Report

If the auditor has any reservation in respect of the certain matters mentioned in the financial statements, he may qualify his report. The auditor may qualify his report only when the subject matter of qualification affects the truthfulness and fairness of the financial statement materially.

1. All the qualifications shall be stated by the auditor in clear and in unambiguous manner in his report.

2. Even if the subject matter of qualification is included in the notes presented by the management, which form a part of the financial statement, auditor has to repeat the subject matter of qualification again in his report clearly.

3. He shall use the word ‘Subject to‘ before stating his qualifications.

4. He shall quantify the effect of the qualifications on the financial statements as a whole as well as on individual items.

5. If the effect of qualification could not be quantified with accuracy, auditor may make an estimate on reasonable basis.

3. Disclaimer

While conducting the audit, the auditor may fail to obtain the required information and explanation or the books of accounts may not be available due to various reasons, or there may arise various situations, which shall restrict the scope of the duties of the auditor.

Under such situations, he may not be in a position to form an opinion, then the auditor shall disclaim to give an opinion.

4. Negative Report

If the auditor is of the opinion that the financial statement does not show the true and fair view of the state of affairs of the business, he shall give an adverse or Negative Report.

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