Definition: An Unqualified Opinion is a report issued by an auditor where he declares the soundness of a company’s financial statement. In other words, the auditor manifests that the statements are accurate.
What Does Unqualified Opinion Mean?
The job of an auditor is to determine the degree of accuracy and reliability of any financial statements being reviewed by them. There are four main opinions that an auditor can state in terms of his appraisal of a particular financial statement, these are: unqualified opinions, qualified opinions, disclaimer opinions and adverse opinions. By issuing an unqualified opinion the auditor declares that he has performed a thorough review of the company’s financial information and procedures to conclude that the financial statements being presented reflect, to the best of his judgment, the current financial situation of the company.
The standard guideline used by auditors to determine if accounting procedures being used are adequate is the Generally Accepted Accounting Principles (GAAP). Compliance with these principles is crucial for an auditor to express an unqualified opinion.
Here’s an example of how this work.
White Paper Co. is a company that manufactures napkins. The company’s fiscal year has ended and they are currently working on their annual report to present it to its shareholders. This annual report includes last year’s financial statements and these statements must be audited by an independent auditor. After performing his assessment the auditor issued an unqualified opinion about the statements. What does this mean for the shareholders that will review the annual report?
According to our concept, an unqualified opinion is a report issued by an auditor that declares the soundness and reliability of a company’s financial statements. In this case, by getting this opinion, the shareholders of the company can be assured that the results that are shown in the annual report are an accurate reflection of what is currently going on with the company.