Adverse Opinion
What It Is:
An adverse opinion refers to the conclusion by an auditor that a company's financial statements inaccurately characterize the company's financial standing.
How It Works/Example:
An adverse opinion is an internal or independent auditor's official written statement of no-confidence in a company's financial statements insofar as it reflects the company's true financial status and adherence to generally accepted accounting principles (GAAP) and disclosure of information.
Why It Matters:
The issuance of an adverse opinion can have serious repercussions for a company as far as its reputation and valuation in the market.
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Cached on May 24, 2012, 6:20 pm