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of
Accounts
Certification of accounts
» Audit Report on Financial (Attest) Audit
is about expression of Auditor’s Opinion
on the Financial Statements. The opinion
is expressed in a prescribed format.
» The present format certifies the accounts
to be “Correct” in the case of Finance
Accounts, and “True and Fair” in case of
others (Govt companies, corporations,
autonomous bodies etc.)
Opinion and basis of accounting
» Properly presents i.e. correct- used when the financial
statements have been prepared on a cash basis,
reflecting the very low level of judgement required due
to in preparing financial statements on a cash basis.
» Presents fairly - used when the financial statements have
been prepared on a partial accruals basis and are not
intended to give a true and fair view. This form of
words reflects the fact that though some element of
judgement has been used in preparing the financial
statements, the audit opinion is distinct one on
accounts which give a true and fair view.
» Presents true and fair view - used when the financial
statements have been prepared on a full accruals basis
and intended to give a true and fair view.
Format of Audit certificate
» Normally, the audit reports on completion of
financial audit will be in the form of audit
certificates.
» However, in appropriate cases, a detailed report
can be annexed to the audit certificate.
» In case the format of audit certificate is prescribed
under the provisions of any law or engagement,
such prescribed format shall be used.
Audit opinion
» The audit opinion will also contain separate
sections dealing with:
» respective responsibilities of the executive and
auditors
» the basis of the opinion expressed
» the opinion on the financial statements.
Basis of Opinion
» The audit certificate should include a statement expressly
setting out the basis of the audit opinion. This will include:
» a statement certifying that the auditor has performed his
examination in accordance with relevant legislative authority -
where there is a legal requirement for him to certify;
» a statement as to compliance or otherwise with Auditing
Standards, together with the reasons for any departure
therefrom;
» a statement that the audit process includes examining, on a test
basis, evidence relevant to the amounts, disclosures and
regularity of transactions included in the financial statements;
and
» a statement that the audit is planned and performed so as to
obtain reasonable assurance that the financial statements are
free from material misstatement.
Expression of opinion
» The audit certificates should contain a clear
expression of opinion on both the truth and
fairness/proper presentation/fair presentation (as
appropriate) and the regularity of the transactions
recorded in the financial statements.
» ‘Truth’ refers to correctness of those matters
capable of being determined with precision such as
the balance of cash at bank etc.
» The concept of ‘fairness’ is linked with a set of
standards which provide a framework within which
judgment can be exercised to report on the entity’s
financial status in fairness.
Unqualified opinion