How to Word an Audit Report


Every public company needs to have their financial statements audited by a CPA. This is to ensure that the accounting was done according to standards and to protect the interest of the stockholders. If you are auditing a company, you will need to provide an report to the owners and stockholders of a company detailing the audit and what your opinion of the financial statements were. This report is set up as a letter in three paragraphs and provides your opinion of financial statements.

Things You'll Need

  • Word processor
  • Completed audit
  • Type the salutation of your audit report "To the Owners and Stockholders of X company." Type the date of the report in the upper right corner of the page.

  • Type the first paragraph. This paragraph needs to state that you performed an audit on the balance sheet of the company as of a certain date and that you audited all related statements (income, retained earnings, and cash flow) at that time as well. Note that the financial statements are the responsibility of the company and your responsibilities end with the audit.

  • Write the second paragraph. This is known as the scope paragraph. Assure the readers of the report that you have performed the audit according to Generally Accepted Accounting Principles. Write out in brief what those standards require you to do (namely to obtain reasonable assurance that the statements are accurate and all financial procedures were done correctly.

  • Finish the report with the opinion paragraph. This is where you inform the owners and stockholders whether, in your opinion, the statements fairly present the financial position of the company. You need to re-list the date of the financial statement so the readers of the report know of what date you are referring. Note that the company has performed their accounting in accordance with GAAP in the U.S.

Tips & Warnings

  • The audit report can be an exact duplicate of a past one if the audit is fair. Just copy a past audit report and change the date after you have completed the audit. If the audit is not correct, you will have to rewrite the third paragraph to say that the financial statements are not a fair representation of the financial position.
  • The final paragraph needs to begin "In our opinion..." There is no way to absolutely tell if all the transactions are correct. The job of the audit is not to check every transaction. It is to provide reasonable assurance that all material transactions have been done correctly.

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