Given that a material weakness is generally disclosed by management prior to the auditor issuing an adverse opinion
on internal control, one would not expect the stock market to be "surprised" by such an adverse opinion
Whether a qualified or adverse opinion
is rendered is subject to the judgment of the auditor, who will consider matters such as the nature of the GAAP departure and the magnitude of the amounts involved.
An adverse opinion
on the assessment of the effectiveness of ICOFR if there are one or more material weaknesses in ICOFR; or
For example, if the auditor uncovers a previously unnoticed material misstatement of credit sales, then the auditor could easily conclude that controls over credit sales are ineffective, and decide that a material weakness exists requiring an adverse opinion
on internal control.
Auditing Services Unit, On A Timely Basis, Their Reasons For Qualifying The Opinion, Disclaiming An Opinion Or Rendering An Adverse Opinion
The Auditors opinion shall be unmodified unless the Auditors furnish to the Local Government, on a timely basis, their reasons for modifying the opinion, disclaiming an opinion, or rendering an adverse opinion
However, the State Board of Accountancy alleged that because of the very material departures from GAAP regarding the disclosure of related parties and the recognition of losses, the firm should have issued either a qualified or an adverse opinion
on the 1991 to 1994 statements and an adverse opinion
on the 1995 to 1997 financial statements.
The Auditor%s opinion shall be unqualified unless the Auditor furnished the County, on a timely basis, the reasons for qualifying the opinion, disclaiming an opinion, or rendering an adverse opinion
Therefore, if the auditor has issued an adverse opinion
or disclaimed an opinion on the statements taken as a whole, the auditor should carefully consider whether reporting on the specified element included in such statement is tantamount to a piecemeal opinion.