The audit report summarizes the auditor's findings and expresses an opinion on the company's financial statements. It should present a true and fair view of the company's affairs, be based on factual information, and contain suggestions for improvement. The audit report must include whether proper books were kept, financial statements agree with books, and statements comply with law. It concludes with the auditor's signature. A clean report means the auditor is satisfied, while a qualified report notes irregularities. Circumstances leading to qualification include improper books, non-compliance, incorrect valuations, and omitted facts. The audit certificate declares the statements' accuracy.

1. AUDIT REPORT

2. Audit Report
• AR is a statement through which an auditor
submit his findings and expresses his opinion on
the state of affairs of the Company’s business.
Features:
• It is a statement through which an auditor
summarises the result of his audit work.
• It is the medium through which he expresses his
opinion on the financial statements of a business.
• It is based on factual information
• It is attached to the balance sheet
• It is submitted to the shareholders

3. Qualities of a good report
(Essentials):
• It should depict the true and fair state of
affairs of the company.
• It should be based on facts.
• It should be forceful and convincing
• It should not be too short or long
• It should be unbiased and free from mistakes
• It should contain suggestion for improvement.

4. Contents of audit Report:
The audit report must contain the following
Information.
• Whether the auditor has obtained all
information and explanation which are
necessary for work.
• Whether proper books of accounts required
by law have been kept by the company.
• Whether the accounts of the branches have
been audited.

5. Contents of Audit Report................
• Whether the profit and loss account and
balance sheet are in agreements with books of
accounts.
• Whether any other statements have been
included as required by the central govt.
• Whether the balance sheet and profit and loss
account give the information as required by
companies Act.
• Certificate of Corporate governance.
• Signature of the company auditor

6. Types of Audit Report:
Clean Report
(Positive/unqualified/Conventional)
• When an auditor is satisfied with the affairs of
the Company and fairness of final accounts,
he gives various matters in his report without
any modification, reservation or qualification.
• Such a report is called clean report. Clean
report is a report without any qualification or
modification.

7. Types of Audit Report...............
Qualified report(Negotive/Adverse Report)
• When an auditor is not satisfied with the
affairs of the company and fairness of final
accounts, he will mention these irregularities
in his report. Such a report is called qualified
report. Qualified report is a report in which
an auditor inserts any qualifications,
modifications or reservations.

8. Circumstances when an auditor issues
Qualified report
• Auditor is not satisfied with financial
statements
• Proper books of accounts as per law have not
maintained.
• There is a violation of companies act
• Accounts are not prepared in accordance with
the Generally Accepted Accounting Principles
(GAAP)
• Omission of material facts

9. Circumstances when Qualified report.........
• Mis-statements in financial statements
• Assets are over valued or under valued
• Incorrect valuation of Stock in trade.
• Incorrect valuation of investment
• Insufficient provision for depreciation
• Inadequate provision for bad debt.
• Creation of Secret reserve.
• Non receipt of branch report.

10. Audit Certificate:
• Audit certificate is the declaration as to the
truthfulness of the statements given by the
auditor.
• It gives an impression that the auditor is issuing a
guarantee of absolute correctness and accuracy
of the statements he makes.
Report on Corporate Governance;
• It is the report to be given by the auditor that all
guidelines issued by SEBI in connection with
corporate governance have been complied with
by the company

11. Difference between Audit Report and
Audit Certificate