Types of opinions

Unmodified (unqualified) opinion

An unmodified (unqualified) opinion states that the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the entity in conform ity with the applicable fi nancial reporting framework. Note that unmodified is the term used for nonissuers and unqualified is the term used for issuers.

Modifications to the auditor's opinion

The auditor's report should be modified when:

1. the auditor concludes that the financial statements as a whole are materially misstated (financial statement issue); or 

2. the auditor is unable to obtain sufficient appropriate audit evidence to conclude that the financial statements as a whole are free from material misstatement (audit issue).

There are three types of modified opinions: the qualified opinion, the adverse opinion, and the disclaimer of opinion.

• Qualified Opinion: A qualified opinion states that except for the effects of the matter(s) to which the qualification relates, the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the entity in conformity with the applicable financial reporting framework.

• Adverse Opinion: An adverse opinion states that the financial statements do not present fairly the finan cial position, results of operations, or cash flows of the entity in conformity with the applicable financial reporting framework. 

• Disclaimer of Opinion: A disclaimer of opinion states that the auditor does not express an opinion on the financial statements.