- *Generally Accepted Accounting Principles, or do not offer a *fair presentation of the entity’s financial position, the results of its operations, or changes in cash flows. Under most systems of *Generally Accepted Auditing Standards, external auditors are obliged to explain the reasons for an adverse opinion, which applies only to *material items that could mislead financial statement users. An adverse external audit opinion can damage a corporation’s public image by sending shock waves through its *stock-holders and the wider investing community. For this reason, adverse opinions are relatively rare for large corporations, and external auditors tend to prefer to persuade an organization’s management to amend financial statements to avoid an adverse opinion. Compare *disclaimer, *qualified opinion, and *unqualified opinion.
Auditor's dictionary. 2014.
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