What is an auditor’s report?


Once the financial statements have been finalized, they must typically include an auditor’s report from a licensed accountant or auditor. The report outlines how to assess a firm’s or organization’s financial statements for validity and reliability. Auditors’ reports, together with profit and loss statements, balance sheets, and directors’ reports, are part of a firm’s statutory accounts.

An auditor’s report is a letter written in which the auditor provides their view of whether a firm’s financial statements comply with generally accepted accounting principles or GAAP and are clear of significant misrepresentation. When a public firm reports revenues to the Securities and Exchange Commission or SEC, the auditor’s report must be submitted with the financial statements.

An auditor’s report’s purpose is to provide adequate assurance that a firm’s financial statements are error-free. The company’s annual report usually includes an independent and external audit report. Creditors and banks demand an audit of a firm’s financial statement before lending to them. Therefore the auditor’s report is essential.

On the other hand, an auditor’s report does not assess whether such a company is a worthwhile investment. In addition, the auditor’s report does not include a review of the firm’s earnings for the period. Instead, the report essentially assesses the financial statements’ accuracy.

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Pieter Borremans
By Pieter Borremans

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