How does a qualified audit report affect bank loans and IRD?

Banks and other users A qualified, adverse or disclaimed opinion tells readers that part or all of the accounts cannot be relied upon. Lenders commonly respond by asking for explanations, security or updated management accounts, and some decline. Credit policies vary by bank, so this is a practical observation, not a legal rule.

IRD

• The BIR51 notes require a certified copy of the audited financial statements. IRD's FAQ says unsigned auditor's reports and uncertified financial statements are not accepted.
• The assessor can query the accounts and the basis of the profit figure, so expect more questions.

Companies Ordinance A modified report is still a valid audit report. Auditors must report if records were inadequate or information was not obtained (s.407), and offences apply to untrue statements in the report (s.408).

Common causes you can avoid

• Missing bank statements or unreconciled accounts.
• Undocumented director loans.
• Stock not counted or not supported.
• Late replies to the auditor.

What to do Ask the auditor what would remove the qualification, fix the cause, and in future years provide the evidence in time.