Download Download: Certification of Accounts

Certification
of
Accounts
Certification of accounts
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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
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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
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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
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The audit opinion will also contain separate
sections dealing with:
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respective responsibilities of the executive and
auditors
the basis of the opinion expressed
the opinion on the financial statements.
Basis of Opinion
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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
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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
n
An unqualified opinion is given when, in
the judgement of the Auditor, the
financial statements properly present
receipts and payments or give a true and
fair view and have been prepared in
accordance with relevant accounting
requirements.
Qualified opinion- I
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The audit opinion should be qualified where the
Auditor is unable to satisfy himself that the financial
statements are free from material misstatement
whether caused by fraud, error or other irregularity.
E.g. For Appropriation Accounts a qualified opinion
is also given on all Excess votes.
Three types of opinion can be given as qualfied
opinions - ‘except for’, ‘adverse’ and ‘disclaimer of
opinion’.
Types of Audit Opinion
Type of opinion Signal
Interpretation
Unqualified
Favourable
True and fair view
Except for
Favourable with True and fair view,
a qualification
but for certain items
Adverse
Unfavourable
Not true and fair,
misleading
Disclaimer of
Opinion
Neither
favourable nor
unfavourable
Unable to express
any opinion at all
Some important points about
Certificate
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The audit certificate should be positioned immediately
before the financial statements and immediately after the
statement of executive’s (directors' or management’s)
responsibilities.
The Auditor should not sign the certificate and/or express
audit opinion until the financial statements and all other
financial information contained in a report of which the
audited financial statements form a part have been approved
by the accounting officer, board, or equivalent persons and
he has considered all necessary available evidence.
The date of a certificate on financial statements is the date
on which the auditor signs the report expressing his opinion
on those statements.