Qualified Audit Report
Meaning:
A qualified report means an audit report which is not clean. In case auditor has any reservation in respect of certain methods mentioned in the financial statements he may qualify his report. A qualified opinion shall be expressed as being subject of or except for the effects of the matter to which the qualification matters. If the accounting standards issued by Institute of Chartered Accounts of India is not followed by the company the auditor may qualify his report.
In addition as per CARO the auditor may qualify in his report in respect of inventories, Fixed Assets, loan given or taken by the company, internal control procedures, internal audit system, acceptance of public deposits, maintenance of cost records, payment of statutory dues, transaction prejudicial to the interests of the company, etc.
Circumstances for Qualification of Audit Report: In following circumstances the auditor has to qualify his report:
1. He cannot conduct audit satisfactorily due to non availability of certain books of accounts or records, information or explanations necessary for conduct of his audit.
2. He finds that the Balance Sheet and Profit & loss Account have not been prepared in accordance with accepted accounting principles.
3. He detects that provisions for Bad & Doubtful Debts, Depreciation etc. are not adequate.
4. He detects that the company has created certain secret reserve.
5. The stock in trade has been valued at market price which is more than cost price.
6. He finds that the contingent liability for bills discounted has not been disclosed.
7. If in his opinion provision for taxation made is not proper.
8. When he finds any embezzlements of cash or misappropriation of goods or manipulation of accounts which considerably affects the financial position of the company.
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