adverse opinion

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Adverse opinion

An independent auditor's opinion expressing that a firm's financial statements do not reflect the company's position accurately. See also: Qualified opinion.

Adverse Opinion

A statement by an auditor that a company's financial statements are inaccurate, whether accidentally or deliberately. An adverse opinion usually follows a report from an internal audit or external audit. Auditors attach adverse opinions to reports if the company's financial statements diverge a great deal from the Generally Accepted Accounting Principles.

adverse opinion

An opinion by a firm's auditors that the firm's financial statements do not accurately present its operating results or financial position. This unusual opinion is a strong warning that investors should be wary. Compare clean opinion. See also qualified opinion, subject to opinion.
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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.
Adverse opinions 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.
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.
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.