What is an Auditor’s Report?

Philadelphia businesses may have a lot of questions for their tax attorney regarding an auditor’s report. An auditor’s report is a review of a business’s financial statement (by either an internal organization or external organization) to assess the company’s current financial position, cash flow and operating results according to GAAP – which is an acronym for “Generally Accepted Accounting Principles.”
An auditor’s report can show that a businesss has properly accounted for its finances, granting that business a clean bill of health, or and audit can show that a company’s financial statements are misleading and should not be trusted. A negative audit report like this is called an adverse opinion.
Auditors alone are granted the power to give a company’s financial statements an adverse opinion, and this can be very threatening to business owners. No business wants their reputation soiled by association with dishonest financial records. Business owners in this case usually want to confer with auditors and change their accounting or disclosure records, so that they will not be branded with a permanent adverse opinion. Since adverse opinions state that a business has not been entirely genuine in recording its finances, the SEC will not tolerate public businesses that have been disapproved by auditors. The SEC can also very easily suspend trading in a company’s stock share if a CPA auditor informs them that the company has not received approval in the audit report.
There are serious incidents, however, when a CPA firm has doubts about a business’s ability to continue as a “going concern“. If a business is a going concern, it means that the business has enough financial resources and initiative to continue operations in the future and if a negative turn of events happened, the business would not have to default on its liabilities. A going concern is a business that does not face an immediate financial crisis, even if it has experienced some financial turbulence. A CPA auditor will assume that a business is a going concern unless evidence proves otherwise. Any doubts that the auditor has about a business’s integrity or status as a going concern will be recorded in the audit report.

Posted in: Auditors,Report