Auditor's Opinion

Imagine The Voice or American Idol, except where the judges are all accountants.

Once auditors have completed an evaluation of a company's financial statements, they issue a document called (without much creativity) the "auditor's opinion." There are three basic types of opinions (the financial equivalent of "marry, date, kill"): an unqualified opinion, a qualified opinion and adverse opinion.

An unqualified opinion might sound like when that pretentious guy at dinner starts spouting off about wine. But in fact, the "unqualified" version is the most common result and by far the most positive. It basically says the auditor approves the results without qualification (thus the name "unqualified"), agreeing that the numbers accurately reflect the company's financial situation.

The qualified opinion is like when you talk about a movie after only seeing the trailer. It outlines ways in which the audit may have been limited...basically saying "everything looked okay that we could see, but we didn't get to look at everything."

Then there's the real bummer. An adverse opinion suggests that the financial statements have serious issues and the auditor is not willing to stand behind them as an accurate portrayal of the company's finances. This option is rarely used. If the auditor has issues with the financial statements, they will often opt for a fourth possibility, known as a disclaimer. This option represents the auditing equivalent of saying "pass"...the auditor issues no opinion and then describes why they couldn't come to an adequate conclusion.