Financial Reporting  & Analysis

Audit Opinion / Qualification

What is an audit opinion?

An audit opinion is expressed on audited statements. It is required that an auditor state in the opinion that generally accepted accounting principles have been followed that they have been applied on a basis consistent with that used the preceding year.

Types of Audit Opinions

Unqualified opinion — The unqualified opinion has no reservations concerning the financial statements. This is also known as a clean opinion meaning that the financial statements appear to be presented fairly.

Qualified opinion / “Except for” — This means that the auditor has taken exception to certain current-period accounting applications or is unable to establish the potential outcome of a material uncertainty as a going concern.

Disclaimer opinion — This is a special type of audit report that should be issued when the auditor permits his or her name to be associated with financial statements that were not examined in accordance with generally accepted auditing standards. Sometime due to  inablility to express opinion or  pervasive uncertainty.

Adverse opinion — This is a type of audit opinion which states that the financial statements have material effect on fair presentation of  the financial position, results of operations, and changes in financial position, in conformity with generally accepted accounting principles.