An audit opinion is a professional opinion offered by a qualified accountant at the close of an audit of financial records. The opinion describes the processes used during auditing, the standards used by the auditor, and other relevant information. It indicates whether or not the auditor believes that the financial records inspected accurately represent the company's financial situation. Because auditors can be legally liable for false representations and misstatements, they are very careful when it comes to issuing a final opinion.
The best kind of audit opinion is an unqualified opinion. When this type of opinion is issued, it means that the auditor fully inspected all of the available information, was able to verify it, and endorses it. The information presented was adequate enough for the auditor to feel comfortable making a judgment endorsing its accuracy and completeness. This increases confidence in the company under investigation.
A qualified audit opinion is an opinion issued with some reservations. It is not necessarily negative, but the auditor may have had difficulty verifying information. Thus, the auditor cannot confirm that the records are scrupulously accurate. This type of opinion usually includes notes about why it is qualified so that someone reading the opinion can make a judgment about the situation independently.
A disclaimer indicates that the auditor does not have enough information to make an audit opinion. This may be because records were not provided or are incomplete. In this case, the auditor can state that the available material was audited, but there is simply not enough to issue an opinion. Disclaimers can reflect poorly on the entity being audited in addition to requiring another audit with more information so that a concrete opinion can be issued.
Finally, an adverse audit opinion is one which states that the financial records do not accurately reflect a company's financial position. This is not desired, and reflects very poorly on the company being audited. Unlike a qualified audit opinion, which may result from any number of circumstances, an adverse opinion usually suggests that something is very wrong with the company's recordkeeping, such as fraud or tampering.
Auditors want to make sure that they issue an audit opinion which is accurate. If they state that records are complete when they are not, they can be liable for the results later on down the line. Conversely, if an auditor issues an adverse opinion which damages a company's reputation and the records later turn out to be sound, the auditor's reputation suffers as well.
