An audit report can be described as a document used by an auditor that contains a written opinion on a loan statement. Loans are audited based on risk assessment .Most of the audit reports are based on the auditors understanding of the controls that have been put in place.

The types of risks that may be recorded in loan audit reports include;

• Discrepancies between the running balance and other supporting documents.
• Loan reconciliations that the management may not be able to explain.
• Gaps in policies and procedures

When auditing a loan the aim is to reconcile the borrowing listing to the final ledger and trial balance. The following should be included in a loan audit report;

The report includes the outcome of the audit conducted and explanations for each finding. The audit report should contain

• The findings of the investigation – when planning for an audit the auditor will be required to  investigate and find out if any laws were violated in the process of loan acquisition.
• A summary of the evidence collected- after the investigation a summary of the evidence of any violation should be recorded.
• An explanation of the audit findings-The auditor needs to extensively give an explanation on how he/she came about the findings of the audit conducted
• Suggestions on the steps to take to avoid similar challenges when acquiring a loan this is important as it will be used as a guide to avoid further irregularities in the process of acquiring a loan.

The audit report makes the borrower aware of any illegalities that may have taken place while acquiring the loan. The report if conclusive may be used by the borrower to follow up on the necessary actions that may be taken in  case there are discrepancies.