Accountant's Letter

  

The numbers you are about to digest in this 10K, 10Q, Annual Report, Special 8k Filing...have all been reviewed by myself and my bean-counting team of Superheroes. The numbers are clean and good and honest and represent GAAP to the best of our knowledge. So have at 'em. Amen. That's the preamble to a serious financial report, written by the chief bean counter, auditor or other oversight person. Reminiscent of a Ludlum novel opening.

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Finance: What is Adverse Audit Opinion?27 Views

00:00

Finance a la shmoop. What is an adverse audit opinion and you know deficiency

00:07

letter. Okay people this is not good you thought you had good grades but when [Report card is thrown onto the desk]

00:14

you got your report card your teachers had opinions adverse to yours... [Report card has bad grades in it]

00:19

They sent your parents a deficiency letter you know the one with all those [Mom looks shocked]

00:23

D's on it well when it's a company's audit that has similarly gone awry it's [Boss looks angry and employee looks shocked]

00:29

the nice way to say it well then it means they didn't count the beans

00:33

properly when they gave their financial reports to their investors or whoever

00:37

the auditors were serving usually this implies that companies overstated how [Employee counting coffee beans]

00:41

profitable they really were or how well they were really doing so tens of

00:44

thousands of investors if you know the company was public when this all [Big line of people waiting to invest]

00:48

happened paid twenty seven dollars and 32 cents a share when with the real

00:52

numbers the stock probably should have been trading more at like you know

00:55

fourteen dollars and 27 cents a share big difference well basically an auditor

00:59

is saying that yours are not bread-and-butter misstatements no oops [Bean report with the numbers crossed out]

01:04

it's more of a dude there were material ie important

01:09

mistakes and they were pervasive like everywhere math, science, english, history

01:14

your failure it's no mystery that's how auditors talk really

01:18

all right well then there are massive losses to massive numbers of people who hire [Protesters on a street]

01:21

massive numbers of lawyers who sue you.. massively.. in the world of finance an

01:25

adverse audit opinion is a bit like running over everyone's favorite dog [Car goes over a bump]

01:30

several times only you're the one who is likely dead meat [Guy reverses and runs the dog over again and the owner comes to fight]

Up Next

Finance: What is Hiding Written Complaints?
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The act of hiding written complaints is...no bueno. An investment rep is legally obligated to pass on any such complaints to their employer.

Find other enlightening terms in Shmoop Finance Genius Bar(f)