PAPER INSTRUCTIONS
Report of independent registered public accounting firm Definition
The report of an independent registered public accounting firm is a document that contains an assessment of the financial position of any company. This document is drafted by using data from the company’s financial statements and other such documents. It also confirms whether the company has adhered to the standard accounting procedures (GAAP).
Overview of Report Of Independent Registered Public Accounting Firm
The report of the Independent Registered Public Accounting firm offers insight into a company’s financial statement upon assessment and evaluation of the company’s relevant documents. This report is designed by public accountants by conducting an audit. The report tends to be significant as the creditors and banks require an audit of the company’s financial records before sanctioning loan/credit to them. This report is usually attached to the company’s financial statements.
The report sheds light on a company’s adherence to standard accounting procedures. The report has to be filed with the financial statements of a public company while reporting revenue to the SEC (Securities and Exchange Commission). However, the report does not inform the reader on whether investing in the company would prove to be a good investment or not, nor is it to be confused with an evaluation of their financial performance. Instead, it is just a mere qualifying measure in stating the company’s financial statements. The report of an independent registered public accounting firm is a document that contains an assessment of the financial position of any company. This document is drafted using data from the company’s financial statements and other such documents. It also confirms whether the company has adhered to the standard accounting procedures (GAAP).
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Report of independent registered public accounting firm DefinitionOverview of Report Of Independent Registered Public Accounting FirmComponents in Report ofan Independent Public Registered Firm:Advantages of Report of an Independent Public Registered Firm:
Components in Report ofan Independent Public Registered Firm:
- Report Title: It gives a clear description of the purpose for which the report is given.
- Report Address: Usually, the report is addressed to the director and shareholders of a company. It describes that the report is given to a particular class of persons.
- Introductory Paragraph: It states the roles and responsibilities and tasks that the audit firm has performed.
- Scope Paragraph: It describes the engagement and the nature of the audit. It also states how the audit adheres to the generally accepted accounting principles (GAAP), standards, and other laws.
- Opinion Paragraph: This statement consists of an opinion by the audit firm that the financial statement is presented fairly in all material aspects.
- Internal Control Paragraph: This paragraph states the internal control that the company follows and the opinion of the auditor on the internal control of the company, and whether it is followed or not.
- Signature: The audit report consists of the signature of the person under whose guidance the audit was conducted.
- Date: Date on which the audit report was signed.
Advantages of Report of an Independent Public Registered Firm:
- It gives an accurate financial standing of an organization.
- It enables the provision of the integrity of the management to the shareholders —whether or not the company is authentic and true toward the shareholders.
- Many owner companies having sub-branches in the same or other nations would want the financial statements to be audited, thus enabling them to manage the subsidiaries effectively.
- The report helps in determining the monetary and non-monetary issues of a company, thus safeguarding the company from future bankruptcy.
- It is a significant legal requirement to get the account audited to offer information on the annual turnover, asset worth, and employee size to the government. The auditor’s role is like proof to the government that the specific entity is running properly and in adherence to the law.
- The report is analyzed by the majority of financial experts.
Limitations of Report of an Independent Public Registered Firm:
- The ethical code requires the auditors to remain indifferent to the audit clients. It is to ensure that there is no auditor bias when the tasks are performed and audit opinion is issued.
- Auditors are required to maintain auditing quality by identifying the risks and minimizing them. Despite the same, it does not eliminate all the risk types(such as fraud risks and inherent risks) of material misstatement from financial records.
- As per the audit standards, auditors have the complete authority to access any information to put forth an opinion. However, in reality, management may try their best to restrain auditors from obtaining sensitive information. At times, management themselves have integrity issues or trust issues with the auditor’s ethics about confidentiality, thus affecting the report quality.
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