Analyzing the Auditor’s Statement: Adverse Opinion
Securities regulations require the company’s auditors to provide a report stating whether investors can rely on the information presented. Such reports can take several forms:
- Unqualified opinion
- Qualified opinion
- Adverse opinion
- Disclaimer of opinion
- Going concern clause
In an adverse opinion, the auditor will state that the financial statements “do not present fairly, in all material respects, the financial position” of the company.
It is rare that investors will see such an opinion, but when they do they should proceed with caution.
For more information, see all articles on: Financial Statement Analysis, Fundamental Analysis, Investing in Stocks, Securities Regulation See also:
The Intelligent Investor: The Classic Text on Value Investing
Financial Statement Analysis: A Practitioner's Guide, 3rd Edition
Managing Investment Portfolios: A Dynamic Process (CFA Institute Investment Series)
