25/03/2023
Four Different Types of Auditor Opinions
Auditors have the option of choosing among four different types of auditor opinion reports. An auditor opinion report is a letter that auditors attach to the statutory audit report that reflects their opinion of the audit. The four types of auditor opinions are:
- Unqualified opinion-clean report
- Qualified opinion-qualified report
- Disclaimer of opinion-disclaimer report
- Adverse opinion-adverse audit report
Unqualified Opinion – Clean Report
An unqualified opinion is considered a clean report. This is the type of report that auditors give most often. This is also the type of report that most companies expect to receive.
An unqualified opinion doesn’t have any kind of adverse comments and it doesn’t include any disclaimers about any clauses or the audit process.
Qualified Opinion-Qualified Report
When an auditor isn’t confident about any specific process or transaction that prevents them from issuing an unqualified, or clean, report, the auditor may choose to issue a qualified opinion. Investors don’t find qualified opinions acceptable, as they project a negative opinion about a company’s financial status.
Disclaimer of Opinion-Disclaimer Report
When an auditor issues a disclaimer of opinion report, it means that they are distancing themselves from providing any opinion at all related to the financial statements.
Some of the reasons that auditors may issue a disclaimer of opinion are because they felt like the company limited their ability to conduct a thorough audit or they couldn’t get satisfactory explanations for their questions. They may not have been able to decipher the correct nature of some transactions or to secure enough evidence to support good financial reporting.
Adverse Opinion-Adverse Audit Report
The final type of audit opinion is an adverse opinion. Auditors who aren’t at all satisfied with the financial statements or who discover a high level of material misstatements or irregularities know that this creates a situation in which investors and the government will mistrust the company’s financial reports.
