adverse opinion

Definition

The auditing equivalent of a failing grade, where auditors formally declare that financial statements are materially misstated and unreliable. It's the corporate kiss of death that sends investors running for the exits.

Example Usage

After the auditor issued an adverse opinion, the company's stock became essentially untradeable and banks called their loans.

Origin

Standard audit reporting framework established by accounting standards bodies

Fun Fact

Adverse opinions are so rare that many veteran auditors have never issued one, since companies usually withdraw statements and fix problems before that point.

Source: Auditing standards and professional accounting terminology

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