What are the characteristics of a good audit report?

An audit report must have appropriate title, such as Auditor's Report'. It is helpful for the reader to identify the auditor's report. It is easy to distinguish it from other reports. The management can issue any report about the business performance. The title of the report is essential. The addressee may be shareholders or board of directors of a company. The auditor can audit the financial statements of any business unit as per agreement. The report should be appropriately addressed as required by engagement letter and legal requirements. The report is usually addressed to the shareholders or the board of directors.

The audit report should identify the financial statements that have been audited. The financial statements may include trading profit and loss account, balance sheet and statement of changes in financial position and sources and application of funds statement. The report should include the name of the entity. Moreover the date and period covered by the financial statements are also stated in it. The audit report should indicate the auditing standard or practices followed in conducting the audit. The international auditing guidelines or national standard practices may be followed. The readers need assurance that the audit has been conducted as per set standards. The auditor's report should clearly state the auditor's opinion on the presentation in the financial statements of the entity's financial position and the results of its operations.

Should be:
Based on factual information
Convincing
Forceful
Unbiased
Point out mistakes
Constructive criticism and not be in reprimanding tone
Offer constructive and timely suggestions to the management
Brief.

Simplicity should be one of the important characteristics of good audit report. It should be clear, should not conceal material information. It should be concise or brevity. Repetitions of facts & figures should be avoided in order to control the length of the report. It should clearly indicate the scope of work to be done, based on objective evidence. Consistency in presenting accounting information should be present in a good audit report according to GAAP or IFRS. It should be unbiased; it should disclose all facts and the truth.
1. Simplicity  2. Clarity  3. Brevity  4. Firmness  5. Objectivity  6. Consistency
7. Accepted principle  8. Disclosure principle.

Characteristics of good audit report:-
Simplicity
Firmness objectivity
Disclosure principle or unbiased
Clarity
Consistency
Accepted principles

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