There is a perception that audit report is important only for publicly held companies not for privately held companies.Is it correct?

I don't think so. Effective  audit reports are important for any company.

Private companies do also have stakeholders like owners and bankers. These companies also need to follow the laws of the land like taxation, zakat etc. The private companies audit report is also relied upon by prospective clients. I hope this makes my point.

The commercial law oblige the public companies to have an internal audit department and an external auditor. to safeguard the rights of the owners and to protect the other stakeholders from misleading informations.

For the privately held companies, auditors function is different, the internal auditors will try to help management in achieving the company goals and to detect the business risks, external auditors will have the same role as for public companies.

An audit is always usefull.