Auditor's Opinion

The opinion appears in the auditor's report, which accompanies the financial statements. It is the main output of an external audit.

There are four main types. An unqualified, or clean, opinion means the auditor is satisfied that the statements are fairly presented. A qualified opinion means the statements are fairly presented except for a specific issue, such as a disagreement over one accounting treatment or a limitation on the evidence available. An adverse opinion means the statements are materially misstated and do not present a fair view. A disclaimer of opinion means the auditor could not gather enough evidence to form an opinion at all.

For example, if a company refuses to let auditors examine records for a major overseas subsidiary, the auditor might issue a qualified opinion or a disclaimer, depending on how significant that subsidiary is.

Auditor's reports may also highlight key audit matters, the areas that required the most attention, and draw attention to material uncertainties, such as doubts about the company's ability to continue as a going concern.

Anything other than a clean opinion is a significant warning sign for investors and lenders.