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The auditor report in a company’s annual report is a short section that very few people seem to pay attention to. In my opinion, it is worth reading the auditor report carefully, to understand what the purpose of an audit is, how it is performed, and what the scope and limitations are. The core message in this discussion of the auditor report is: absence of evidence does not necessarily equal evidence of absence. Keep that message in mind, its meaning will become clearer along the way, and I will illustrate it with an example at the end of the video. We will take an example of the auditor report from the annual report of a real-life company called Alphabet Inc (the parent company of Google), with the audit performed by a real-life audit firm called EY, short for Ernst and Young. The wording in auditor reports seems fairly similar, so once you understand how this works for one company and its audit firm, you will probably recognize most of the wording for any annual report that you pic...
