An auditor examining business receipts.
An auditor’s certificate, also known as a business audit opinion, is the statement issued after a company undergoes a professional accounting audit. The auditors will spend a few days or weeks performing the audit and testing the company’s financial information. Once this process is complete, the auditor will issue an opinion for use by internal and external stakeholders of the business. The information contained in the auditor’s certificate will provide a brief statement as to whether the auditor approves or disapproves of a company’s financial information. There are four common types of certificates: unqualified, qualified, disclaimer, or adverse opinion.
An auditor’s certificate containing an unqualified opinion indicates that the auditor has no questions or lingering doubts about the company’s financial information. Informally, this is known as a “health certificate,” mimicking the statement a doctor would give to a healthy person. The unqualified opinion assures business stakeholders that the financial statements conform to national accounting standards, that internal controls are adequate, and that there were no limitations during the course of the audit.
A qualified opinion means that an auditor has a problem with the application of national accounting standards or that some other problem exists as a result of the audit. This may include the failure to disclose material information related to the company, an unfair representation of the company’s finances, or the failure to properly apply accounting standards. This auditor’s certificate generally requires a business to undergo a corrective audit to re-verify financial information after corrections are made.
The third auditor’s certificate is a disclaimer opinion. Auditors issue this statement when they have not completed a full audit of a company’s financial statements or financial information. This opinion is often associated with professional accounting services, such as a review engagement, where accountants may provide companies with a cursory review of financial information rather than a full audit. Unsurprisingly, this opinion carries much less weight than other opinions.
An adverse audit opinion is the worst statement an auditor can make about a company’s financial information. The auditor will issue this opinion when he or she considers that the company has material and material misstatements in its information, if it experienced significant limitations in conducting the audit, or if it does not believe that the company will continue as a going concern. An ongoing concern is a marketing phrase indicating that a business will be able to continue operations for years to come without experiencing significant disruption. Auditors can start an audit and stop halfway through issuing an adverse opinion. This will complete the audit and alert stakeholders to the company’s position.