One of the key goals in financial reporting is transparency—the ability for a reader of financial reports to “see through” the reports to understand the underlying business. Standards from the Financial Accounting Standards Board are intended to promote transparency, and auditors check that the financial statements are prepared in accordance with those standards. A clean audit opinion tells readers that they can trust what they see in, and what they see through, the financial statements.
The audit, though, is opaque. Other than people who have performed audits, not many know what is done. The auditor’s report explains the limitations of an audit, to tamp down the “expectation gap” where the public believes auditors do more than they actually do; the report provides no information about the audit itself. The words in every clean audit report are identical, while the work behind each one is very much customized.
