A qualified audit opinion is a written statement in an auditor's report indicating specific areas of noncompliance in an otherwise acceptable financial statement, explains Marty Schmidt of Solution Matrix Ltd. Among other reasons, qualified audit opinions may be the result of misplaced accounting entries that lead to erroneous results.Continue Reading
Auditors can also give qualified opinions in circumstances where they are unable to fully verify the veracity of all sections of a financial report, notes Schmidt. Lingering uncertainty about the conformity of a financial statement to required accounting standards may also lead to a qualified opinion.
In contrast, an unqualified audit opinion shows that the financial statements under review conform to required accounting standards, states Schmidt. Unqualified opinions are the typical outcome of the overwhelming majority of auditing processes.
An adverse opinion, on the other hand, shows that the statements under review do not conform to required accounting standards and are a misrepresentation of an organization's financial position, according to Schmidt. Because of the potentially negative publicity that an adverse opinion can elicit from investors and other stakeholders, auditors generally recommend corrections to financial statements before they are released to the public.
An auditor can also give a disclaimer of an opinion, notes Schmidt. In such cases, auditors choose not to enter an opinion. Disclaimers of opinions are typically the result of unreliable or hard-to-verify financial statements. Auditors can also give disclaimers of opinions when they are unable to give impartial opinions.Learn more about Accounting