Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Auditor's Opinion

What it is:

An auditor's opinion is a written statement describing an auditor's independent, unbiased and qualified evaluation of the accuracy and completeness of a company's financial statements and practices, as well as an evaluation of a company's compliance with Generally Accepted Accounting Principles (GAAP).

How it works (Example):

When an auditor feels that a company's financial statements are fair and accurate, it issues an unqualified opinion and does so using a standard reporting template (this is why many opinions read the same way). An audit report also includes a statement that the audit was conducted in accordance with GAAP. When the auditor cannot give an unqualified opinion, it issues a qualified opinion, which lists the reasons for the auditor's concern about the company's financial statements and controls and the possible effects on the financial statements.

Here is an example of an unqualified opinion, for the Disney Corporation:

Why it Matters:

An audit's objective is to help the auditor form an opinion of the accuracy and fairness of a company's financial statements. This is done for the sake of the shareholders, regulatory authorities, lenders and other people with an interest in the health of the company.