Financial statements of a company on the letter head of an auditor
Certain instances have been observed where in auditor has used own letter head for printing of balance sheets, profit loss statements of a company. Financials statements of a company should not be printed on letter head of an auditor. Same has also been pointed out by the ICAI in journal published in the August, 1982 issue of ‘the Chartered Accountant’ p. 175. Financial Statements on Auditor’s Letterhead is a gross mistake.
This practice can lead to several issues:
1. Confusion of Roles: It can create confusion about the role of the auditor. The letterhead implies that the auditor is responsible for the preparation, accuracy and completeness of the financial statements. However, the preparation and presentation of financial statements are the responsibility of the company’s management.
2. Lack of Independence: The use of the auditor’s letterhead can compromise their independence. An auditor should be impartial and objective, and using their letterhead can suggest a closer relationship with the company than is appropriate.
3. Misrepresentation of the Company: The financial statements should be presented in a way that clearly indicates the company’s identity. Placing financial statements on the auditor’s letterhead obscures the company’s role and confuses stakeholders, making it hard to identify the audited entity.
4.Correct Practice:
- Financial Statements: Must be prepared by the company, presented on its letterhead signed by the directors, and submitted for audit.
- Auditor’s Report: Prepared on the auditor’s letterhead, signed by the auditor, and attached to the financial statements as an independent opinion.
Kindly take note, preparation and presentation of financial statements is responsibility of the management of the company. Auditor has to simply obtain financials from the company on letter head of the company for audit purpose. However, independent audit report with applicable annexures of a company should be printed on letter head of an Auditor. As audit report is outcome of an audit which is prepared by the auditor and should be on own letter head.
