Adverse opinion
From Wikicpa
In auditing, an adverse opinion is the opposite of an unqualified opinion; it is an opinion that the financial statements do not present fairly the financial position of the client in conformity with generally accepted accounting principles. If an auditor is to express an adverse opinion, they must be sure to have accumulated significant evidence to support their opinion.
An audit report that includes an adverse opinion should include one or more middle paragraphs describing the reasons for the adverse opinion and a modified opinion paragraph as illustrated below:
- In our opinion, because of the effects of matters discussed in the preceding paragraphs, the financial statements referred to above do not present fairly, in conformith with generally accepted accounting principles, the financail position of ABC, LLC as of December 31, 20XX, or the results of its operations and financial position for the year then ended.
Adverse opinions are somewhat rare because most clients follow the recommendations of the independent auditors with reference to fair presentation of the financials.
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