Question

Draft the standard form of audit report commonly issued after a satisfactory audit of a public client's financial statements. Assume that the auditor's issued a separate report on internal control and that the company is not required to present critical audit matters.

Answer 1

An Audit Report is a report describing the financial condition and internal accounting controls by an independent auditor. The report is consumed by the stakeholders of the organization like the board of directors, shareholders.An auditor’s report describes the financial statements that were audited in the introductory paragraph. In the scope paragraph, the nature of the audit is briefed upon and the auditor’s opinion is expressed in the opinion paragraph. The basic aspect of the audit report includes; Title, addressee, introductory paragraph, managemnts' responsibility, auditors responsibility, opinion, basis of the opinion , name and signature of the auditor, address of auditng firm and date of audit report.

This is the standard form of an audit report ;

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The board of directors and shareholders

ABC LTD.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheet of ABC LTD, (the company) as of March 31,2019 and 2018, and the related consolidated statements of operations, comprehensive income, stock holders’ equity and cash flow for each of the two years in the period ended March 31, 2019 and the consolidated financial statements. In our opinion, the consolidated financial statements present fairly, in all material respects the financial position of the company at March 31, 2019 and 2018, and the results of its operations and its cash flow for each of the two years in the period ended March 31, 2019, in conformity with U.S. generally accepted accounting principles.

                       We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (U.S.) (PCAOB), the company’s internal control over financial reporting as of March 31, 2019, based on criteria established in internal control.

Basis for opinion

These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on the company’s financial statements based on our audits. We   are a public accounting firm registered with the PCAOB and are required to be independent with respect to the company in accordance with the U.S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

                       We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain the reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

X&Y LLP (auditing company)

auditor name ,(sign)

X&Y LLP

Washington, US

April ,2019