At the top of many quarterly results, a small line says “unaudited” or “subject to limited review”. Readers often wonder whether that means the numbers are unreliable. It does not, but it does mean the numbers have been checked to a lighter standard than the annual ones.
Audit versus limited review
An audit is an in-depth examination. The auditor tests records, confirms balances, examines controls and then gives an opinion on whether the financial statements give a true and fair view. A limited review is narrower: the auditor mainly asks questions and analyses the figures, and concludes whether anything has come to their attention suggesting the statements are materially wrong. It gives less assurance than an audit, and the report says so in careful wording.
In India, listed companies must publish quarterly results that have been reviewed by their statutory auditor, and annual results that have been audited. The year-end results for the fourth quarter are published with audited full-year figures.
Why Q4 looks different
The fourth-quarter figure is usually derived: it is the audited full-year number minus the figures already reported for the first nine months. Such a figure is often called a balancing figure.
Take a fictional company, Cauvery Steel. Audited full-year profit is ₹180 crore. The first three quarters reported ₹40, ₹45 and ₹35 crore, totalling ₹120 crore. The implied Q4 profit is ₹60 crore. But if the year-end audit caused adjustments, say an additional provision of ₹15 crore, the full-year result absorbs it, and all of it appears in Q4. The Q4 number is therefore not “reviewed on its own”; it carries whatever the audit changed.
What this means for a reader
- Q4 figures can jump or fall more than the earlier quarters for reasons of timing, not business change. Check the notes for adjustments.
- Quarterly numbers are not meaningless. They are the company’s own figures, reviewed, but may be revised at year-end.
- Always compare Q4 with Q4 of the previous year, so both include the same kind of year-end adjustments.
Other labels you may see
- Restated: earlier figures changed, often due to accounting policy changes or mergers. Use the restated comparatives, not the old ones.
- Qualified or modified opinion/conclusion: the auditor has raised a concern. This deserves a careful read of the explanation.
What the auditor’s report can say
The auditor’s report on annual statements, and the review report on quarterly ones, usually take one of a few forms.
- The auditor has no reservations. This is the usual outcome.
- The statements are fine except for a specific matter, which the report describes.
- The statements as a whole are not fairly presented. This is rare.
- The auditor could not gather enough evidence to give an opinion. Also rare.
Even an unmodified report may carry an emphasis of matter, a paragraph drawing attention to something already disclosed in the notes, such as a significant legal case. It is not a qualification, but it points to something worth reading.
A Q4 example in numbers
Back to Cauvery Steel, with a year in which the first three quarters showed profits of ₹40, ₹45 and ₹35 crore. Suppose the audited full-year profit is ₹150 crore instead of ₹180 crore. The implied Q4 is 150 − 120 = ₹30 crore. If Q4 last year was ₹55 crore, the year-on-year change is −45%. But the cause may be a year-end adjustment, such as a write-down of inventory, which relates to the whole year’s activity and not just the last three months. The notes should say what happened, and it is often possible to see the effect in the full-year figures.
What to do when Q4 looks odd
- Compare the full year with the previous full year as well as Q4 with Q4.
- Read the note on the quarterly figures: it will say that the Q4 figure is the balancing figure between the audited full year and the nine-month figure.
- Look at the audited annual notes for one-offs.
- Check whether earlier quarters were revised.
A reminder
The label “unaudited” is a statement about the level of assurance, not about the honesty of the figures. Quarterly numbers are the company’s own, prepared by management, approved by the board and reviewed by the auditor. They are the best information available at that moment, and they are subject to the same disclosure rules as the annual numbers. The reader’s task is to recognise their limits, and to read the later, audited statements when the full year is published. Many companies also publish two versions of each statement, covered in standalone and consolidated results explained.
None of this is about trusting or distrusting a company; it is about knowing how firm each number is. For a fuller explanation of the report types and what the wording signals, see how audit and limited review differ.
When you next see “unaudited” on a quarterly statement, read it as a label of the level of assurance, not a warning.
