The audit report in China is the final result of the audit work and has the statutory effect. After the implementation of the necessary audit procedures, the CPA forms an audit opinion based on the verified audit evidence and is issued an audit report, which is of great significance to all parties involved.
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Definition of the audit report
The audit report refers to the written documents issued by the certified public accountant after the implementation of the necessary audit procedures in accordance with the requirements of the independent auditing standards and used to issue audit opinions on the annual accounting statements of the audited entity. The audited entities involved here include enterprises responsible for the preparation and submission of accounting statements and audited by certified public accountants and institutions that implement enterprise management.
Nature of the audit report
- The audit report is a comprehensive summary report on the audit work. Explain the results of the audit work The way to achieve the audit target of the CPA is to implement the audit process, and the results of the audit objectives are reflected through the audit report. The audit report reflects the final requirements of the client and also reflects the quality of the auditor's work, and is also a concentrated expression of the evaluation and conclusions of the subject.
- The audit report is a legally binding document. The auditing behavior of the CPA is carried out in accordance with the law. The audit results are responsible for the client in accordance with the provisions of the law and are also responsible for other related parties. The audit report itself should express opinions on the legality, fairness, and consistency of accounting treatment methods of the audited financial statements. All parties concerned use the accounting opinions to make decisions based on such opinions with the forensic role. Therefore, the audit opinion in the audit report must be convincing, fair and serious, and have legal effect. Otherwise, the principal and various parties need not to use the audit report. The statutory effect of the audit report is reflected in the process of using the audit report by all parties involved.
- An audit report is a publicly available information report. As a kind of information report, the audit report can be used not only by the audit client and the management unit of the audited entity but also by relevant creditors, banks, financial institutions, financial departments, industry and commerce departments, tax authorities and the public. Audit reports and obtain fair information on the extent to which the project is fairly reflected.
The role of the audit report
The CPA expresses its opinions on whether the financial status, operating results and fund changes reflected in the audited financial statements are legal, fair and consistent in the capacity of a detached independent third party. This objective opinion is obtained by the government and its various departments. And the general recognition of all walks of life objectively played a role in forensics.
The CPA issues audit reports of different opinion types to improve or reduce the degree of trust of users of accounting statements in accounting statements, and can effectively protect the property of the audited entity, the interests of creditors and shareholders, and the interests of corporate stakeholders.
By issuing an audit report, the CPA can prove (or indicate) the quality of the audit work and the audit responsibility of the CPA. It can prove whether the CPA has implemented the necessary audit procedures in the audit process and whether the audit opinion is based on the audit evidence. Whether the opinions expressed are objective and true, and the audit report can also prove the performance of the audited accountant's audit responsibility.
The content of the audit report
The independent auditing standards stipulate a more reasonable, scientific and rigorous audit report based on the absorption and reference of international auditing standards and the US generally accepted auditing standards.
Regarding the title of the audit report, there are many names in the world, such as the report of certified public accountants, the opinions of certified public accountants, and so on. In China, according to the provisions of the "Independent Auditing Standard No. 7 - Audit Report", the title of the audit report is uniformly standardized as "audit report".
Refers to the principal of the audit business. The audit report should state the full name of the recipient. For example, “Sichuan Changhong Electric Co., Ltd.” cannot be abbreviated as “Sichuan Changhong Company”. In addition, the full name of the recipient should be printed by a certified accountant or a computer, and cannot be replaced by the official seal of the recipient. It is the basic requirement of official documents.
The following paragraphs should be stated in the scope of the audit report:
(1) The name of the audited financial statement, the date or period of the reflection
(2) Accounting responsibility and audit responsibility
(3) Audit basis
(4) Audit procedures already implemented
Classification of audit reports
- According to the scope and nature of the audit work, it can be divided into standard audit report and non-standard audit report.
- According to the purpose of the audit report, it can be divided into the purpose of the publication of the audit report and the purpose of the non-published audit. The purpose of the audit report is the audit report for the non-specific stakeholders such as the owner, investor or creditor of the audited entity. Such audit reports must be accompanied by an accounting statement. Typically, standard audit reports are audit reports that are used for public release. The non-announcement audit report refers to an audit report distributed to a person with a specific purpose, such as a business operator, a related party to a merger or business transfer, or a financial institution providing credit. The CPA's provision of such audit reports is usually issued on the basis that the principal has a specific purpose, such as certain items of accounting statements, operations management, mergers or business transfers, and financing funds.
- According to the detailed level of the audit report, it can be divided into a simple audit report and a detailed audit report. As the name implies, it is a brief and concise audit report of the content and format, including various audit opinions issued by the certified public accountant after auditing the accounting statements. Audit report. The content of such audit reports is stipulated by laws or auditing standards, and the words used to express them are well-known. Therefore, it is required to be concise and has a general standard format. The detailed audit report refers to the audit report issued by the CPA as a result of detailed and specific analysis and explanation of all important economic business and situations. Because the detailed audit report is rich in content and varies in degree, it is difficult to make uniform wording or basic uniform wording, and it does not have the characteristics of a standard format. For example, the report issued by the audited entity on management and economic benefit audits will not be clear to the CPA. In some cases, tens of thousands of words, even hundreds of thousands of words, plus attachments, the contents of these audit reports More and more words can be compared to the monographs of this audit theory or practice.
- According to the format of the audit report, it can be divided into text-based audit report and tabular audit report text. The explanatory audit report is the most common format form, and most audit reports use this format. The tabular audit report is an audit report in the form of a form. Such audit reports are rare, and they are not the same as imagined in people's minds. Because it is more or less necessary to be accompanied by certain texts, pure tabular audit reports do not exist.
Audit report preparation requirements
The purpose of the CPA audit is to express an audit opinion on the legality, fairness, and consistency of accounting methods of the audited entity, and provide economic forensic services to the society. The preparation and issuance of audit reports by CPAs should focus on this purpose so that the elements are complete, the opinions are accurate, the evidence is sufficient, and the content is legal.
The basic elements of the CPA's audit report are complete and indispensable. The basic elements of the audit report include title, recipient, scope, opinion section, the signature of the certified public accountant, the signature of the accounting firm, and reporting date. Each element has its own specific meaning and unique role. If one of them is missing, the audit report will lose its meaning and will also affect the quality of the information provided by the audit report.
The CPA should truly reflect the audit in the audit report, and the audit report will accurately convey the audit opinion to the report user. Generally, the CPA's accurate opinion is based on the following two ways. The first is that the CPA must obtain sufficient and appropriate evidence for the actual situation of the audited financial statements during the audit implementation stage, and correctly understand and evaluate the issues under review; The CPA correctly stated the audit opinion in the audit report at the audit report stage. There are three requirements for expressing the audit opinion:
(1) The CPA should accurately select the type of audit opinion;
(2) Use the description paragraph accurately;
(3) The terminology specified in the audit reporting standards is used in a standardized manner.
Refers to the audit evidence obtained by the CPA sufficient to support the audit opinion. Obtaining sufficient audit evidence is a prerequisite for reducing audit risk. Otherwise, the audit report and the opinions it reflects are like castles in the air.
Refers to the preparation of certified public accountants and the issuance of audit reports must comply with the provisions of the Independent Auditing Standards.
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