Other Explanatory Information and Paragraphs
Although the auditor reports mentioned above are the standard reports for financial statement audits, the auditor may add additional information to the report if it is deemed necessary without changing the overall opinion of the report. Usually, this additional information is included after the opinion paragraph, although some situations require that the additional information be included in paragraphs before the opinion paragraph. The most frequent paragraphs include:
- Limiting distribution of the report – In some occasions, the audit report is restricted to a specified user and the auditor includes this restriction in the report, such as a report for financial statements made in cash basis which are prepared for tax purposes only, financial statements for a wholly owned subsidiary whose sole user of its financial statements is its parent company, etc.
- Additional or supplemental information – Certain auditees include additional and/or supplemental information with their financial statements which is not directly related to the financial statements. Examples include governments that incorporate health, crime, and education statistics along with the financial statement reports for the general public to read and use. Since it is not directly related to the audit of the financial statements, the auditor includes a brief disclaimer paragraph to state that the auditor's report only applies to the financial statements and its respective notes.
- Certain audit work performed by another auditor – Sometimes an auditee requires that two or more auditors perform audits on its operations in order to obtain a more effective audit. This usually occurs in large governments and corporations who have certain dependencies, subsidiaries, or other similar components which require an auditor different from its main auditor to perform an audit on the original auditee's component due to size, time, location, and/or technical constraints. When the main auditor has to rely on another auditor's work, the main auditor may either accept responsibility for the component's information and not modify the audit report, or may chose to disclaim the audit on the specific component, stating that the main auditor did not audit the component, that another auditor audited the component, that the component's audited information is therefore the responsibility of another auditor, and that the main auditor is simply including it in the original auditee's information. If used, this disclaimer is usually included in the introductory paragraph.
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