Unqualified opinion definition
/What is an Unqualified Opinion?
An unqualified opinion is an audit report that has been issued with no reservations regarding the state of an audit client's financial statements. In this opinion, the auditor follows a standard opinion format to state that the financial statements are a fair representation of the financial results and condition of a client, in accordance with the applicable accounting framework (such as GAAP).
Creditors, lenders, and investors want to see financial statements with an unqualified opinion attached to them before they will lend money or invest funds. If there is any form of qualification to an audit opinion, this is a major red flag for financial statement users.
Unqualified Opinion vs. Other Opinions
An unqualified opinion indicates that the auditor is satisfied with the fairness of presentation of a company’s financial statements. This is opposed to an adverse opinion, in which the auditor does not believe that the financial statements accurately portray a company’s financial position or results. Another option is the qualified opinion, in which the auditor concludes that there is a material issue, which they describe in the audit report. Yet another option is the disclaimer of opinion, where the auditor states that no opinion can be given, due to an issue that does not allow for the gathering of sufficient appropriate audit evidence.
Terms Similar to Unqualified Opinion
An unqualified opinion is also known as a clean opinion.