What are the "other than unqualified" opinions? - QS Study
QS Study

The audit report is the auditor’s formal means of communicating to interested parties a conclusion about the audited financial statements. The main objective of an audit is to enable an auditor to report to the members of the company with regard to the truth and fairness of the financial statements and other records of the company.

Audit Reports Other than Unqualified

(1) Qualified Opinion, (2) Adverse Opinion, (3) Disclaimer of Opinion

Qualified Opinions

Auditor concludes that the overall financial statements are fairly presented, but cannot give an unqualified opinion due to either; a limitation on the scope of the audit, or the client’s failure to follow GAAP. If the condition is highly material/significant, a disclaimer or adverse report must be used.

Qualified Opinions – Scope Limitations

Examples: (1) Failure to observe client’s ending inventories, because of client’s requests or a late appointment of the auditor by the client, (2) Failure to confirm accounts receivable, (3) Other situations where inadequate accounting records exist.

Adverse Opinion

Used only when the auditor believes the overall financial statements are so materially misstated or misleading that they do not present fairly the financial position or the results of operations and cash flows in conformity with GAAP can only be given if the auditor has Specific knowledge of the absence of conformity with GAAP [factual].

Disclaimer of Opinion

It is issued whenever an auditor has been unable to satisfy himself that the overall financial statements are fairly presented. Results from either; a severe limitation on the scope of the audit, or a non-independent relationship between the auditor and the client, given if the auditor has a lack of knowledge of the circumstances. [Unproven]