Types of Audit Opinions

Lesson:

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.
You've been asked to testify about your audit of David Co..

This is what you've been told:

  • The firm would not allow the auditors to see many records.
What is the expected outcome of this audit?

Answer:

  • That engagement resulted in an disclaimer opinion.

Explanation:

    Disclaimers of opinion are the result of an inability to complete the audit in an impartial manner.
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