Okay, people...this is not good. You thought you had good grades, but when you got your report card, your teachers had opinions adverse to yours. They sent your parents a deficiency letter. You know, the one with all those “D”s on it.
Well, when it’s a company’s audit that has similarly gone awry, it means that they didn’t count the beans properly when they gave their financial reports to their investors, or whoever the auditors were serving. Usually, this implies that companies overstated how profitable they really were, or how well they were really doing…so tens of thousands of investors, if the company was public when this happened, paid $27.32 a share, when with the real numbers, the stock probably should have been trading at more like $14.27 a share.
Basically, an auditor is saying that yours are not bread-and-butter misstatements. No “oops.” It’s more of a “dude, there were material, i.e. important, mistakes, and they were pervasive. Like…everywhere. Math, Science, English, History, your failure is no mystery.” Then there are massive losses to massive numbers of people who hire massive numbers of lawyers who sue you…massively.
In the world of finance, an adverse audit opinion is a bit like running over everyone’s favorite dog. Several times. Only you're the one who is likely dead meat.
Related or Semi-related Video
Finance: What is Hiding Written Complain...2 Views
Finance a la shmoop what is hiding written complaints? all right remember
when you were a kid and your teacher sent home a note to your parents and not [Teacher gives boy a note]
a good one you knew you were in big-time trouble so you know why not just hide
the note what your parents don't see can't hurt you right? while hiding
written complaints on Wall Street is kind of like that if an investment rep
receives a written complaint from a client they are legally obligated to
pass it along to their employer and their boss who has to add it to the reps
[Submarine appears] U4 which is not a military submarine but a form that the rep has to
use when registering with the stay you know for their license hiding written
complaints is illegal and can get the rep in deep you know what and like in
the real world it gets a lot worse than being grounded and you know having your [Person picks up Xbox console]
xbox taken away for a week yeah good luck with that
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