Depending on the findings at the time an audit is carried out, there are different opinion paragraphs used in a company’s audit report. These are summarised below.

Unqualified (“clean”) report

The auditor has concluded that the accounts are free from errors which would render the accounts not to show a true and fair view. This type of report is the ideal scenario for a company following an audit.

Unqualified report with Emphasis of matter paragraph

Again, the auditor has concluded that the accounts are free from errors which would render the accounts not to show a true and fair view. The auditor has however, drawn the readers attention to a significant issue that has been noted in the accounts. An example of this is if there are going concern issues in the company and this has been disclosed in a note to the accounts. Because of the significance of the issue, the auditor will make reference to this in the audit report but since it has been disclosed as a note in the accounts, the auditor believes that the financial statements have shown a true and fair view.

Qualified “except for” report

The auditor may conclude that there are some areas that they are in disagreement with. This may be as a result of expenses misanalysed, assets over/understated, incorrect application of accounting standards, non-disclosure of an issue required to be disclosed, or some other reason. In such instances, the auditor will give an “except for” opinion meaning that they are of the opinion that the accounts give a true and fair view except for the issue(s) they have listed. Another possible reason is that there may be a “limitation of scope” on the audit. Certain events may have occurred which mean that the auditor is not in a position to form an opinion on a certain aspects of the financial statements. A common limitation of scope occurs when the auditors had not been appointed at the time the company carried out its year end stocktake. In such instances, a limitation of scope qualification will be included in the audit report.

Qualified “adverse” report

Where the areas with which the auditor is in disagreement with are of such a significance that they result in the financial statements not showing a true and fair view, the auditor will issue an adverse opinion. This is a serious qualification as the auditor has indicated that the accounts do not show a true and fair view and cannot be relied upon to do so.

Disclaimer of Opinion

The auditor has decided that it is not possible for them to issue an opinion on the financial statements. This could be as a result of limitations placed on the auditors work by the directors of the company or due to multiple uncertainties at the time of the audit. In this instance, the auditor is effectively saying that they are not forming any opinion on the statements.

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