New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    Refer to the following information to answer the next 4 questions (Q17 to Q20) The word Audit is derived from Latin word “Audire” which means ‘to hear’. Auditing is the systematic examination of financial statements, records and related operations to determine adherence to generally accepted accounting principles, management policies and stated requirement. Importance of auditing can be judged from the fact that even those organizations which are not covered by Companies Act get their financial statements audited. It has become a necessity for every commercial and even non- commercial organization. A company appoints an auditor who submits his opinion on the truthfulness and fairness of the financial performance and position of the company. An auditor’s Report is the format of result of all the effort that goes into the audit. Communicating the Auditor’s findings to interested users is part of all audits. Thus, the Final phase of an Audit involves preparing that communication, which is known as auditor’s report.

    When an auditor is satisfied with the fairness of the

    balance sheet and profit and loss account, which of the following audit report is submitted by him/her?
    A Qualified report Correct Answer Incorrect Answer
    B Unqualified report Correct Answer Incorrect Answer
    C Disclaimer of opinion report Correct Answer Incorrect Answer
    D Emphasis of matter report Correct Answer Incorrect Answer
    E Adverse report Correct Answer Incorrect Answer

    Solution

    Unqualified/ Clean/ Fair report: When an auditor is satisfied with the fairness of the balance sheet and profit and loss account, he will give a clean report. When the auditor makes various statutory affirmations without reservations, he is said to have the given an unqualified report on financial statements of the company.

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