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After doing an audit of a company's financial accounts, an independent auditor may offer a qualified opinion as a sort of audit report. In this kind of report, the auditor states that there were constraints or exceptions in the audit process that could have impacted the accuracy or comprehensiveness of the financial accounts.
When the auditor discovers serious misstatements in the financial accounts or when the client firm fails to submit adequate supporting evidence for the audit process, a qualified opinion is typically issued. The audit's shortcomings are highlighted in the qualified opinion, along with the reasons why the auditor was unable to provide an unqualified opinion.
A qualified opinion is less desirable than an unqualified opinion, which states that the auditor has no concerns with the company's accounting procedures and that the financial statements are presented honestly and accurately in all material areas. Investors and lenders may be concerned by a qualified opinion since it implies that there may be problems with the company's financial reporting, which could have an impact on the company's future financial performance.
