Types of Audit Opinions

Lesson Exercise Solution

Audits involving looking at financial statements and figuring out if they're reliable.

At the end of an audit, the financials receive one of four types of opinions from the auditor:

Unqualified Opinion - The auditor believes that the financials have been presented fairly. This is the evaluation that investors like the most.
Qualified Opinion - The auditor believes that the financials have been presented fairly, except for one item.
Adverse Opinion - The auditor does not believe that the financials have been presented fairly. This can be catastrophic for the organization being evaluated.
Disclaimer of Opinion - The auditor cannot express an opinion, due to an inability to complete the audit in an impartial manner. In some cases, the disclaimer of opinion may be the result of factors entirely outside of the control of the audited firm.

After an exhausting analysis, you've completed your audit of Igloos Unlimited.

You've been provided with the following information:

The financials held up to scrutiny, but the auditors weren't able to verify the inventory of a remote warehouse.

What kind of opinion should be expected?

Qualified opinions are given to financials that are presented fairly with one exception.