Written communication identifying an accountant's engagement, responsibilities, work, and opinion, conclusion, or findings.
An accountants’ report is a written communication that identifies the financial information examined, the accountant’s responsibilities, the work performed, and the resulting opinion, conclusion, or findings. The report’s value and level of assurance depend on the engagement: an audit, review, compilation, attestation engagement, and agreed-upon procedures engagement do not provide the same work or conclusion.
The term is broader than an auditor’s report and is not limited to stock-exchange prospectuses. Readers must identify the report type, reporting framework, period, scope, practitioner, and any modification before relying on it.
| Engagement | Typical level of assurance | Main procedures | Typical report result |
|---|---|---|---|
| Financial statement audit | Reasonable assurance | Risk assessment, testing, inspection, observation, confirmation, recalculation, and analysis | Opinion on whether statements are fairly presented, in all material respects |
| Financial statement review | Limited assurance | Primarily inquiry and analytical procedures | Conclusion generally expressed in negative-assurance form under the applicable standard |
| Compilation | No assurance | Assist management in presenting financial information | Report states that no audit or review was performed and no assurance is provided |
| Agreed-upon procedures | No opinion or general assurance conclusion | Procedures agreed with specified parties | Factual findings for users to evaluate |
| Other attestation engagement | Depends on subject and standard | Procedures designed for the stated objective | Opinion, conclusion, or findings as the engagement requires |
Terminology and report form vary by jurisdiction and professional framework. The report itself should identify the governing standards.
Although formats differ, a financial-statement auditor’s report commonly identifies:
Public-company reports may also include a separate opinion on internal control over financial reporting when required. That opinion answers a different question from the financial-statement opinion.
| Opinion or outcome | General meaning |
|---|---|
| Unmodified or unqualified | Statements are fairly presented, in all material respects, under the identified framework |
| Qualified | A material issue exists, but it is not pervasive to the statements as a whole |
| Adverse | Material and pervasive misstatements make the statements not fairly presented |
| Disclaimer of opinion | The auditor cannot obtain sufficient appropriate evidence or lacks a basis to express an opinion |
Exact wording and classification depend on the applicable standards. An explanatory paragraph or critical audit matter does not necessarily modify the opinion.
Assume a lender asks a privately held distributor for year-end financial statements before renewing a credit facility. The company could provide several kinds of accountants’ reports:
The same balance sheet can therefore accompany reports with very different evidentiary weight. A user should not treat the accountant’s name or letterhead as a substitute for reading the engagement description.
Determine whether the report covers complete financial statements, a schedule, internal control, compliance, prospective information, or another subject. Confirm the dates and entities included.
The report should state whether the work followed PCAOB standards, U.S. generally accepted auditing standards, International Standards on Auditing, or another professional framework. Different standards may use different report language.
For an audit, identify the opinion and any qualification, adverse opinion, or disclaimer. For a review, locate the limited-assurance conclusion. For agreed-upon procedures, focus on the findings because the accountant does not supply the user’s conclusion.
Look for scope limitations, departures from the reporting framework, going-concern language, material weaknesses, restatements, changes in accounting, and other explanatory paragraphs. Then connect those matters to the related notes in the financial statements.
Audit and review engagements generally involve independence requirements under the applicable framework. A compilation report may disclose a lack of independence where professional standards require that disclosure.
An accountants’ report does not necessarily establish:
An unmodified audit opinion is about fair presentation under a reporting framework, within materiality and audit-risk limits. It is not a guarantee of business quality, liquidity, valuation, or future survival.
Engagement standards and legal consequences vary by jurisdiction and use. This page is educational and does not provide accounting, audit, legal, regulatory, tax, credit, or investment advice.