What is an Unqualified Opinion?
How Does an Unqualified Opinion Work?
For example, let’s assume that Company XYZ is a publicly traded company. After the year-end, Company XYZ hires Auditor ABC to conduct an audit of its financial statements, practices and controls for the previous fiscal year. Auditor ABC discovers no material errors in Company XYZ’s practices (for example, the auditor verifies that Company XYZ has accounted for correctly, has kept good records regarding its cash accounts, and provided adequate records for review regarding depreciation). As a result, Auditor ABC an unqualified opinion, which appears in the form of a letter that accompanies Company XYZ’s financial statements.
Why Does an Unqualified Opinion Matter?
An unqualified opinion is a good thing. It is a notice to investors and regulators that the auditor has no significant concerns about the accuracy of a company’s financial records and that it has verified that the company is following rules. The opposite of an unqualified opinion is a , which is a flag from the auditor.