The report produced by the auditor should be the first thing that a user of a financial report reads.

It is only having read the audit report that the user can have any confidence that the contents of the financial report are a reasonable representation of the financial position and performance of the company.

In order to understand what comfort the audit report gives, any user must understand what an audit is, the role of the auditor and the role played by management and the board of directors of the company.

The amount of information included in the auditor's report has increased in recent years in an attempt to reduce the expectation gap.

Required

a. Discuss the advantages and disadvantages of the standardisation of audit reports.

b. Explain the following components of an auditor's report and discuss why they are important:

i. auditor's and directors’ responsibilities.

ii. independence.

iii. audit opinion.