Unaudited Opinion

Categories: Accounting

So...the numbers came in. The CFO is presenting them to the Board of Directors. They look "clean." The company had expected $73.4 million in revenues and $11.8 in earnings, and that's about what the CFO presented.

But...she opined that these numbers are unaudited. They haven't had a neutral set of eyes on them. They're most likely accurate, but...they may not be. And for legal filing purposes, they're all just guesses. Until an outside party has taken a hard, cold look at the numbers, they don't mean nothin'.

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Finance: What is Adverse Audit Opinion?27 Views

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

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

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

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

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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]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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]

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