Unqualified Audit - Explained
What is an Unqualified Audit?
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Table of ContentsWhat is an Unqualified Audit?How is an Unqualified Audit Used?Unqualified Report vs. Qualified ReportAcademic Research for Unqualified Audit
What is an Unqualified Audit?
An unqualified audit is a form of an audit of a company's account and finances done by an independent auditor. Usually, audits are appraisals of a company's status and how compliant it is to generally accepted accounting principles (GAAP). An unqualified audit is one of the four types of audits, other types are qualified audits or opinion, adverse opinion, and disclaimer of opinion. Once an independent auditor carries out an unqualified audit on a firm, an unqualified opinion is given stating that the firms financial statements are properly presented and follow the principles of GAAP. During an unqualified audit, the independent audit examines the internal records of a firm as well as its financial statements and other external records.
How is an Unqualified Audit Used?
An unqualified audit or opinion is otherwise called a clean opinion, this opinion is given by an independent auditor showing that the financial statement of a firm is free from misrepresentations, ambiguity and are compliant to the standards of GAAP. An unqualified is the most favorable audit or opinion a business can receive, it is done by an independent auditor without any biases or prejudice. An unaudited opinion is the opposite of an unqualified audit, this type of opinion is given without any appropriate findings of the financial statement of a firm or internal and external practices. Unqualified audit, however, pays attention to the details and accuracy of the financial statements presented by a company and its internal and external practices.
Unqualified Report vs. Qualified Report
In every audit, the auditor is expected to give his opinions about the financial statement of a company and how well the company has maintained the standards of GAAP. Qualified opinion (report) or an unqualified opinion (report) can be given. In an unqualified opinion, an auditor discloses that the financial statements of a company are fairly and accurately presented and that the business complies with the standards of GAAP. A qualified report, on the other hand, is an auditors opinion about a firm which concludes that the business has been largely compliant but a few parts of its financial statements are misrepresented. This report could also mean that some parts of the company's statement are in disagreement with the standards of GAAP.