14.1 Purposes of auditors’ report and concept of true and fair view

The purposes of auditors’ reports are to provide assurance to the users of financial statements regarding the credibility and reliability of the information presented. Some of the main purposes of auditors’ reports include:

1. Enhancing Confidence: Auditors’ reports instill confidence in the financial statements by providing an independent and objective assessment of their accuracy and compliance with applicable accounting standards and regulations.
2. Facilitating Decision-Making: The reports help users, such as investors, creditors, and other stakeholders, make informed decisions based on reliable and trustworthy financial information.
3. Meeting Legal and Regulatory Requirements: Auditors’ reports fulfill the legal and regulatory requirements for the audit of financial statements, providing evidence that the audit has been conducted in accordance with the applicable standards.
4. Assessing Accountability: The reports hold management accountable for the preparation and fair presentation of the financial statements, as well as for the effectiveness of internal controls.
5. Promoting Transparency and Accountability: Auditors’ reports contribute to the overall transparency and accountability of financial reporting, ensuring that entities disclose relevant information accurately and adequately.

The concept of a “true and fair view” is central to the auditors’ report. It represents the auditor’s professional judgment regarding the accuracy and fairness of the financial statements. The true and fair view concept implies that the financial statements fairly present the financial position, performance, and cash flows of an entity in accordance with the applicable financial reporting framework.

To form an opinion on the true and fair view, auditors perform various audit procedures, including assessing the entity’s accounting policies, evaluating the appropriateness of financial statement disclosures, testing the accuracy of financial transactions, and evaluating the overall presentation of the financial statements. The auditors’ opinion, as expressed in the auditors’ report, provides assurance to the users that the financial statements present a true and fair view of the entity’s financial position and performance.