Types of audit opinions and what they mean
An opinion is either unmodified or modified: qualified, adverse, or a disclaimer of opinion. What stands behind each type and what it means for the company.
What an audit report is
The audit report is an official document for users of the accounting (financial) statements in which the auditor expresses, in the prescribed form, an opinion on their fairness. Requirements for the report are set by Article 6 of Federal Law No. 307-FZ “On Auditing” (in Russian). The form of the opinion follows ISA 700, 705 and 706.
Unmodified opinion
The auditor concludes that the statements present fairly, in all material respects, the financial position and performance in accordance with the applicable financial reporting framework (ISA 700).
Modified opinions (ISA 705)
- Qualified opinion — misstatements are material but not pervasive, or the auditor could not obtain sufficient appropriate evidence on specific matters.
- Adverse opinion — misstatements are both material and pervasive.
- Disclaimer of opinion — the auditor could not obtain sufficient appropriate evidence, and the possible effects of undetected misstatements could be both material and pervasive.
Paragraphs that draw attention
The report may include “Emphasis of Matter” and “Other Matter” paragraphs (ISA 706). They do not modify the opinion; they point to matters important for understanding the statements.
What it means for the company
Most findings are discussed before the report is issued, and some can be corrected before the statements are signed — see “Typical audit findings”. How the work goes from the first request to the report is shown in the “Client journey” block on the homepage.
TODO(legal): wording to be reviewed by a lawyer; add links to ISA 700, 705 and 706 as adopted in Russia.