What is Opinion Shopping

Opinion shopping is the practice of searching for an outside auditor who will provide a favorable opinion of the company's financial condition. An accountant's opinion (also called auditor's certificate) is intended to show that the company's financials are fairly presented and that they conform to the generally accepted accounting principles (GAAP). This opinion is important to lenders and investors who rely on independent views of a company's books and records when making decisions.

BREAKING DOWN Opinion Shopping

Opinion shopping is a dubious practice that involves finding an auditor who will overlook any shortcomings in the company's financial reporting. Opinion shopping is prohibited by the Securities and Exchange Commission (SEC).

An accountant's opinion can be qualified or unqualified. If the opinion is qualified, the accountant has questions about the company's accounting principles and/or the scope of the information provided. When a company goes opinion shopping, it is seeking an unqualified opinion that finds the company's financial statements to be fairly presented, in all material respects, and in accordance with GAAP. An unqualified opinion is the most common type of accountant's opinion.

If a company suddenly changes its audit firm, this may be a sign that it is opinion shopping. On the other hand, sometimes firms seek a second opinion. As in other professions, public accountants can have different opinions about the many interpretations and judgment calls that are involved in preparing the financial statements of large, complex corporations. Obtaining a second opinion can easily turn into opinion shopping if the firm persists in searching for an auditor that will merely confirm decisions it has already made.