fbpx

What impact does the audit opinion actually have on the business? Will it cause more tax problems?

Auditing is a task that many SMEs have to carry out every financial year. By engaging experienced auditors to properly handle the audit process and complete the audit report, they will issue an “audit opinion” throughout the document. Does the audit opinion contribute to the financial development of the company? Once the opinions are unfavorable, what will be the impact on the enterprise? This article will answer the questions one by one.

What is an “audit opinion”?

We know that when the certified public accountants complete the audit work, they will comment on the “audit opinion” in the audit report.

In order to verify whether the target enterprise can meet the standards required by the standard, and express opinions.

In other words, an audit opinion directly expresses whether the financial statements have been prepared in accordance with applicable accounting standards, affirming or denying the fairness of the information disclosed by the company (financial position, results of operations and cash flows).

Brief description of the four audit opinions:

After understanding the audit opinion, it is necessary to know what the four common audit opinions represent, so as to draw the audit conclusion of the accountant:

  • Unqualified opinion
  • Qualified opinion
  • Adverse opinion
  • Disclaimer of opinion

In short, when the auditor believes that the reasons fully reflect that the company complies with the relevant accounting standards, they can issue an “unqualified opinion”, which is the result most wanted by the company; on the contrary, the other three opinions represent the company’s failure to confirm the financial results. Fairness of information, and proper adherence to standards, are generally collectively referred to as “unqualified opinions”.

If you want to know more about the four types of audit opinions, you can refer to the article “What is an audit opinion? A detailed explanation of the four types of audit report opinions in Hong Kong”.

What is the impact of the audit opinion?

The audit opinion is so important, and in what ways will it affect the enterprise?

First of all, the audit opinion does not mean that the company’s operating conditions are not good, but at most it can only reflect that the accounting and finance are questionable. That is to say, companies that do not receive an “unqualified opinion” will not be ordered to suspend business, nor will their daily operations be affected.

However, since certified public accountants leave audit opinions in the audit report, banks and tax bureaus will be able to more clearly grasp the description of the relevant stakeholders and the ins and outs of the company’s assets in the company’s financial statements, so as to facilitate them to evaluate the company :

For “loan”:

The audit opinion mainly affects the bank’s loan evaluation to the enterprise. If the company fails to obtain an “unqualified opinion” in the review report, the bank may ask the company to provide more financial validity proofs when considering the process of lending, and have the opportunity to tighten its loan requirements, which will negatively affect the company’s capital flow. pressure.

For “assessment”:

The audit opinion also affects the actions of the Inland Revenue Department. Since the audit directly reflects the authenticity of the company’s financial affairs, the tax returns inevitably need to fill in the audit report information. If there is a “negative opinion”, “disclaimer of opinion”, etc., it is likely that the tax bureau will believe the accounts on the audit date. There are places to be suspicious and increase the chances of companies being spot checked for tax audits.

The above information is for reference only. If you have any questions about tax declaration and accounting, we welcome your inquiries.

Sharing / 分享:

× Whatsapp Enquiry