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Types of Reports (Auditor's Opinion)

This opinion may take four forms:

  • Favourable opinion.
  • Qualified opinion.
  • Disclaimer of opinion.
  • Unfavourable opinion.

Partial expressions of opinions are not permissible, but certifications on specific facts can be issued. The term “opinion” is limited to the audit opinion. 

Favourable opinion.

Issued in those audits of accounts after all audit procedures have been carried out satisfactorily, with no limitations on the scope of the auditor's work. Thus, a favourable opinion also implies the absence of limitations on the scope, the Annual Accounts have been prepared in accordance with generally accepted accounting principles, consistently applied, containing all the information needed and sufficient for proper understanding and interpretation.

Qualified opinion.

The auditor's report is not always favourable, however. It is relatively common that the report contain an adverse opinion (derived from the so-called exceptions), or opts for abstention (caused by uncertainties and limitations on the scope).

This applies where, in the judgement of the auditor's report, there are circumstances that significantly affect the financial statements as a whole. These can be caused by some of the following circumstances:

  • Scope limitations.
  • Errors or non-compliance with accounting principles and standards.
  • Omissions of information.
  • Changes in accounting policies from those used in the previous year.

Scope limitations occur when the auditor is unable to carry out some audit examinations he considers relevant to establish his opinion.
The uncertainties arising from situations where the auditor is not able, with the information available, to evaluate their impact on the annual accounts

Unfavourable opinion.

This involves the statement that the financial statements do not reflect the true image, and is the result of errors, of very significant breaches or that a large number of caveats exist. The auditor must state the reasons expressed in an unfavourable opinion.

Disclaimer of opinion.

Used to indicate that, after performing the audit, the auditor has not been able to form an opinion on the situation that reflects the company accounts because of:

  • Scope limitations.

 

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