What Is the Purpose of an Audit Report?
The purpose of an audit report is to inform external stakeholders of an auditor's objective opinion of a company's financial health. Many auditor's reports are made up of three paragraphs, which explain the responsibilities of the parties involved, describe how well generally accepted accounting principles were used, and finally form an opinion of the financial health of the company, according to Investopedia.
An auditor's job is to collect information and assess the finances of a company. Depending on how large the company is, this can take anywhere from a few days to several weeks or even months. The auditor is an objective outside source that has no personal interest in the company, and makes sure that all finances are taken care of in accordance with national and international laws. While auditors make sure a company is paying all of its required taxes and keeping track of legal finances, they also make opinionated conclusions about the financial health of the company, according to Accounting, Financial and Tax.
At the end of the company's financial assessment, the auditor compiles a report that explains his or her findings. The reports are extremely important for both the company and the company's external shareholders. The company learns how well they have been managing finances, and can make changes to fix problems that the auditor found, while external shareholders learn important information regarding whether or not their investments in the company are worthwhile.