In short
An adverse opinion states that the financial statements are not presented fairly. It is expressed when misstatements are both material and pervasive.
Key takeaways
- The report includes a basis for adverse opinion describing the misstatements and, if practicable, their effects.
- If misstatements are material but not pervasive, the opinion is qualified instead.
- An adverse opinion relates to misstatements; a lack of evidence leads to a disclaimer instead.
Where it's tested
AUD: Audit Reports — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An auditor is unable to observe the physical inventory count or satisfy themselves through alternative procedures, and inventory represents 60% of total assets. What opinion is appropriate?