Definition of Qualified opinion:
A qualified opinion may be given when a company’s financial records have not followed GAAP in all financial transactions, but only if the deviation from GAAP is not pervasive. The term "pervasive" can be interpreted differently based on an auditor's professional judgement. However, to not be pervasive, the misstatement must not misrepresent the factual financial position of the company as a whole and should not have an effect on decision-making of financial statement users.
A qualified opinion is a statement issued in an auditor's report that accompanies a company's audited financial statements. It is an auditor's opinion that suggests the financial information provided by a company was limited in scope or there was a material issue with regard to the application of generally accepted accounting principles (GAAP)—but one that is not pervasive. Qualified opinions may also be issued if a company has inadequate disclosures in the footnotes to the financial statements.
Independent auditors opinion, (given as part of an audit report) stating: (1) the audit was restricted in scope otherwise the financial statements present fairly the financial position of the firm, or (2) the audit was unrestricted and for the entire accounting period but an unqualified opinion cannot be expressed because (a) the account books and records do not completely reflect conditions that conform to the provisions of GAAP, (a) there has been a material change (between accounting periods) in accounting policies or in the methods of their application, (c) there are significant uncertainties regarding assumptions underlying the financial statements, (d) the auditor was unable to conduct complete verification of the accuracy of the accounting records due to certain omissions, (e) the auditor and the management were unable to reach a compromise agreement regarding method of treatment or valuation of certain assets, and/or (f) the management was unwilling or unable to correct certain unacceptable practices or situations. Also called auditors qualified opinion.
How to use Qualified opinion in a sentence?
- A qualified opinion is an auditor's opinion that the financials are fairly presented, with the exception of a specified area.
- A qualified opinion is one of four possible auditor's opinions on a company's financial statement.
- It indicates that there was either a scope limitation, an issue discovered in the audit of the financials that was not pervasive, or an inadequate footnote disclosure.
- Unlike an adverse or disclaimer of opinion, a qualified opinion is generally still acceptable to lenders, creditors, and investors.
Meaning of Qualified opinion & Qualified opinion Definition