Gathering the support required for an audit can be a labor-intensive task, and not being able to do so can result in a modified audit opinion or a disclaimer of opinion
, both of which will raise red flags with the DOL and IRS.
Internal testing cannot be performed at a later date because the system or process could have changed, and as a result, they may be unable to obtain sufficient evidence to reach an opinion on the financial statements, resulting in either a disclaimer of opinion
or a modified opinion.
Normally, however, when the possible effects on the financial statements of any misstatements undetected due to the scope limitation could be both material and pervasive in the auditor's judgment, a disclaimer of opinion
on the financial statements (as has historically been the case for these EBP engagements) would be required.
There have been concerns about Daewoo's accounting transparency after Deloitte Anjin made a disclaimer of opinion
on the firm's accounts book in November.
CHHK's reports on the financial statements of the Company for the fiscal years ended December 31, 2014 and 2015 did not contain an adverse opinion or disclaimer of opinion
, nor were they qualified or modified as to uncertainty, audit scope or accounting principles, except that its report for the fiscal year ended December 31, 2015 contained an emphasis of matter paragraph regarding the Company's ability to continue as a going concern.
The audit reports of Mazars, the consolidated financial statements of MMIL and subsidiaries as of and for the years ended December 31, 2013 and 2014 did not contain any adverse opinion or disclaimer of opinion
, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
In terms of strengthening disclosure and protecting investors, the CMA's board issued its resolution to suspend trading the shares of a listed company if the certified public accountant's report on its preliminary or annual financial statements included a Disclaimer of Opinion
or an Adverse Opinion and it will be lifted after removing the Disclaimer of Opinion
or an Adverse Opinion from the financial reports.
Global Credit Rating Co also looked at the fact that NamibRe attained a clean audit for the annual financial statements for the year ending 2013 and the previous Disclaimer of Opinion
had been waived following the challenges experienced with its financial reporting that led to the Disclaimer being issued by its auditors, Ernest &Young on its financial statements of 2012 which resulted in the rating agency reviewing NamibRe's credit rating.
Practitioners often believe that the disclaimer of opinion
in a limited-scope engagement.
The auditors qualified the accounts with a disclaimer of opinion
. They cast ''significant doubt'' on the company's ability to continue as a going concern.
Unqualified (clean) Opinion, Qualified Opinion, Adverse Opinion, and Disclaimer of Opinion
If the auditor concludes that it is necessary to express an adverse opinion or disclaim an opinion on the entity's complete set of financial statements as a whole, an unmodified opinion on a specific element in the same auditor's report would contradict the adverse opinion or disclaimer of opinion
on the entity's complete set of financial statements as a whole and would be tantamount to expressing a piecemeal opinion.