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Chapter 23
THE AUDITOR’S REPORT 1: OVERALL 
STRUCTURE
1. Introduction
Now we begin to look at the auditor's report. For many people, this is the only purpose of an audit 
and it’s one of the few parts of an annual report that they really look at.
The auditor’s report includes a clear expression of 
opinion 
on the 
financial statements as a whole
.
The two important phrases are:
๏
‘Opinion’
: there is nothing absolute here. Different firms of auditors could quite legitimately 
come to different opinions.
๏
‘
Financial statements as a whole’.
We are not just looking at the statement of financial 
position in isolation from the statement of profit or loss or the notes. What’s important is the 
impression given by the financial statements as a whole.
The audit opinion has to be based on evidence obtained in the course of the audit. Indeed if you had 
to sum up the audit process in just a couple of words it the phrase would be ‘evidence gathering’. 
Auditors need to collect evidence that will support their opinion on the financial statements. 
2. Financial statements
The auditor’s report refers to financial statements and you need to know what these are. They consist 
of the following:
๏
The statement of financial position (or balance sheet).
๏
The statement of profit or loss and other comprehensive income.
๏
The statement of changes in equity.
๏
The cash flow statement.
๏
The notes to the financial statements including significant accounting policies.
A director’s report and chairman’s statement included in an annual report are not part of the financial 
statements. However, the auditor may have reporting responsibilities for such 'other information’.