An adverse opinion
indicates that the agency's financial records do not conform to generally accepted accounting principles (GAAP).
We extend this line of research by focusing on a sample of firms that received an adverse opinion
on internal controls, and examine the specific factors that affect auditor turnover, including the severity and nature of the internal control deficiencies, the amount of auditor-related fees, the length of the auditor-client relationship, and the type of audit firm that expressed the negative opinion.
Since there are only 23 disclaimers or adverse opinions
, we merge them into qualified opinions to increase the power of statistical tests.
are in fact a negative statement, clearly advocating that the financial results do not represent a fair presentation.
Approximately 11% of companies received adverse opinions
on internal control in 2006, down from 16% in 2005.
However, while some people may expect a certain level of adverse opinions
to be issued by companies, others may overreact if they are surprised by such opinions.
In both the qualified and adverse opinions
, the auditor will include in the opinion the departure from GAAP and will quantify the amounts involved, if determinable.
Estimates on the number of companies that might fail the SOX 404 test have varied widely, with most predicting that 10 percent may receive adverse opinions
Regarding whether we contemplate a "flurry of disclaimers" where auditors are unable to "successfully complete an audit," yes, we do; in fact, we expect adverse opinions
to become more common.
Explore the reality that a very large percentage of these weaknesses/deficiencies may be remediable and that there is a high probability that the system will experience a one-time bulge of adverse opinions
that will not be repeated on a going forward basis.
based public companies will not meet the deadline and could face adverse opinions
," says Francine McKenna, Founder and President of Chicago-based consulting firm, McKenna Partners.
Plante & Moran's reports on the consolidated financial statements of the Corporation for each of the fiscal years ended March 31, 2001, March 31, 2002 and the nine month period ending December 31, 2002 contained no adverse opinions
or disclaimers of opinion, and none were qualified or modified as to uncertainty, audit scope or accounting principles.