Disclaimers of opinion are documents that are sometimes issued by an auditor. This type of auditor’s statement essentially makes it clear that the auditor is not in a position to express a specific opinion on the overall status of the financial records of the client. This type of document may be issued when there is any type of irregularity that the auditor is not able to reconcile to his or her satisfaction.
The actual structure of a disclaimer of opinion may vary slightly from one instance to another. However, the document will contain three specific pieces of information in all cases. First, the auditor will formally state that he or she is unable to express an opinion, based on the financial records that were provided by the client. The next section will identify the specific reasons why the auditor is unable to provide a final opinion. As a third element, the auditor will provide any reservations present in regard to the financial records that were provided.
Auditor’s statements generally do include an opinion. Essentially, the opinion is an endorsement on the complete nature of the financial records, noting they are in full compliance with current accounting procedures. The disclaimer of opinion is only issued if there are serious omissions or other factors that make it impossible for the auditor to affirm the veracity and completeness of the information provided.
A disclaimer of opinion does not necessarily imply that the auditor suspects that there is some type of impropriety taking place with the financial records. If necessary documentation is not made available to justify line items recorded in the accounting records, the auditor may feel that it is not possible to issue an opinion at that time. In like manner, if there is sufficient documentation but the record keeping is not in compliance with generally accepted accounting principles, the auditor is likely to issue this type of disclaimer. At the same time, the auditor is likely to encourage the client to seek the services of a professional accountant to put things in order.
The disclaimer of opinion remains in effect until the client makes the necessary adjustments to the accounting records that bring the documents into full compliance with accounting standards. At that time, an auditor can re-evaluate the financials and determine if all outstanding issues have been addressed properly. Once an opinion has been issued by the auditor, the previous disclaimer of opinion is considered null and void.