Audit Report Format - Unqualified Opinion

Audit report is a document prepared by a Chartered Accountant appointed by the Board of Directors of the Company after examining the accounts and operational records of a company. All Companies registered in India are required to

appoint an Auditor within 30 days of incorporation. An Auditor thus appointed by the Directors or Shareholders of a Company would verify the accounts and financial position of the Company every year and certify that the accounts presented by the Company is in conformance with the Accounting Standards acceptable in India and CARO 2016. In addition to certifying that the accounts are in conformance with the accounting standards, the Auditor would also report on various important aspects of the company like internal control, failure to pay statutory dues, pending litigations, etc., The Audit Report certified by a Chartered Accountant must be filed by the Company along with its annual return. In this article, we look at audit report format for an unqualified opinion.

Types of Audit Report

Audit Report is categorised into four different types as under:

Unqualified Opinion or Unmodified Opinion
Qualified Opinion or Modified Opinion
Adverse Opinion
Disclaimer of Opinion

Know more about

types of Audit Opinion.

Unqualified Audit Report Format

The following Audit Report format would be issued by the Auditor of the Company on his/her letterhead addressed to the members of the company.

Audit Report Format

Download the Audit Report Format in Word Format

TO THE MEMBERS OF XXX COMPANY LIMITED Report on the Standalone Financial Statements We have audited the accompanying standalone financial statements of XXX COMPANY LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 20XX, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 20XX, and its profit/loss and its cash flows for the year ended on that date.

Emphasis of Matters (Optional)

We draw attention to the following matters in the Notes to the financial statements:

Note X to the financial statements which, describes the uncertainty related to the outcome of the lawsuit filed against the Company by XYZ Company.
Note Y in the financial statements which indicates that the Company has accumulated losses and its net worth has been fully / substantially eroded, the Company has incurred a net loss/net cash loss during the current and previous year(s) and, the Company’s current liabilities exceeded its current assets as at the balance sheet date. These conditions, along with other matters set forth in Note Y, indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note.

Our opinion is not modified in respect of these matters.

Other Matter (Optional)

Mention any other matter that is financially or operationally significant to the company, if required. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

As required by Section 143 (3) of the Act, we report that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. (b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. (c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. (d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. (e) On the basis of the written representations received from the directors as on 31st March, 20XX taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 20XX from being appointed as a director in terms of Section 164 (2) of the Act. (f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”. (g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

If applicable, mention any pending litigations which would impact the financial position of the Company.
If applicable, mention if the Company has any long-term contracts including derivative contracts for which there were any material foreseeable losses.
If applicable, mention any delay in payment of statutory dues.

Place: Date:

For ABC & Co

Chartered Accountants

(Firm’s Registration No.)

Signature

(CA. Name)

(Designation)

(Membership No. XXXX)

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Frequently Asked Questions

Common questions about Unqualified Audit Report Format for Indian Companies.

An unqualified opinion audit report, also known as an unmodified opinion, is issued by an auditor when they conclude that the financial statements of the company are presented fairly, in all material respects, in accordance with the applicable financial reporting framework, such as the accounting standards and regulations in India.

An unqualified opinion is issued when the auditor, after conducting a thorough audit, is satisfied that the company's financial statements are free from material misstatements and comply with the relevant accounting standards and regulations.

An unqualified opinion audit report is considered the best possible outcome of an audit. It provides assurance to the stakeholders, such as shareholders, creditors, and regulators, that the company's financial statements are reliable and can be used for decision-making purposes.

The auditor's responsibility when issuing an unqualified opinion is to obtain sufficient and appropriate audit evidence to conclude that the financial statements are free from material misstatements. This involves performing various audit procedures, assessing risks, and evaluating the company's internal controls and accounting policies.

The key elements of an unqualified opinion audit report format include the title, addressee (members of the company), introductory paragraph, management's responsibility, auditor's responsibility, opinion paragraph, emphasis of matter (if applicable), other matter (if applicable), and report on other legal and regulatory requirements.

The "emphasis of matter" paragraph is used by the auditor to draw attention to a matter that is adequately disclosed in the financial statements but is of such importance that it is fundamental to the users' understanding of the financial statements.

The "report on other legal and regulatory requirements" section is used by the auditor to report on specific requirements mandated by the applicable laws and regulations, such as the Companies Act in India. This section may include reporting on matters like internal financial controls, pending litigations, and statutory dues.

No, an auditor cannot issue an unqualified opinion if there are material misstatements in the financial statements. In such cases, the auditor may issue a qualified opinion, an adverse opinion, or a disclaimer of opinion, depending on the nature and extent of the misstatements.

An unqualified opinion is issued when the auditor concludes that the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. A qualified opinion, on the other hand, is issued when the auditor identifies one or more material misstatements or a scope limitation that prevents the auditor from obtaining sufficient appropriate audit evidence.

Yes, all companies registered in India are required to appoint an auditor and obtain an audit report on their financial statements. The auditor's report, whether an unqualified or modified opinion, must be filed by the company along with its annual return.