Definition
Qualified Opinion
A qualified opinion is an auditor's verdict that the financial statements are fairly presented except for a specific issue the auditor disagrees with or could not verify.
A qualification signals that, apart from one or more identified matters, the accounts are reliable. The auditor explains the basis, such as inadequate provisioning, a disputed valuation or an inability to obtain evidence on a particular item.
For investors, a qualified opinion is a yellow flag warranting investigation, milder than an adverse opinion (statements are misleading) or a disclaimer (auditor cannot form an opinion). Recurring or worsening qualifications often precede deeper governance or accounting problems at Indian companies.
Related terms
- Related Party Transaction (RPT)An RPT is a deal between a company and parties connected to it, like promoters or group firms, which can be a governance red flag if abused.
- Auditor's ReportThe auditor's report is the independent auditor's formal opinion on whether a company's financial statements give a true and fair view and comply with accounting standards.
- Emphasis of MatterAn emphasis of matter is a paragraph in the auditor's report that draws attention to a disclosed issue without modifying the audit opinion.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.