Updated on March 6, 2023
Auditors are one of the most important participants in an IPO.
Auditors are registered Chartered Accountants employed by a company to carry out due diligence and review the financial statements of the company.
Their responsibilities include ensuring all the accounting policies are duly met and inspecting and ascertaining the correctness of the books of accounts. Auditors are also responsible for the correct valuation of the company which can then be the base for ascertaining the price band of the IPO or the issue price in a fixed price IPO. They have a duty to the shareholders to present the true and fair view of the company and to ensure that there is no misrepresentation. They have to issue an audit report with their opinion on the financial statements.
After studying the financials of a company, an auditor can give his/her opinion under the following categories:
1. Unqualified opinion / Clean report
2. Qualified opinion / Qualified report
3. Disclaimer of opinion / Disclaimer report
4. Adverse opinion / Adverse audit report
Investors must carefully look at the Auditor’s opinion before deciding on investing in a company’s IPO.