What is an Unqualified Audit
An unqualified audit refers to a complete audit that has been performed and researched so thoroughly that the only possible remaining discrepancies stem from information that could not be obtained by the auditor. An unqualified audit analyzes both the internal systems of control, as well as all of the details in the organization's books. All ancillary documentation and supporting records are used in an unqualified audit.
Additional names for unqualified audits often included unqualified opinions and unqualified reports.
BREAKING DOWN Unqualified Audit
An unqualified audit is essentially the opposite of an unaudited opinion, which gives an opinion without any actual research. Unqualified audits are performed according to accepted accounting principals, with an emphasis on detail and accuracy. If an audit cannot be classified as unqualified, then a qualified opinion is given instead that outlines the auditor's reservations concerning the organization's financial statements.
In an unqualified report, auditors will conclude that the financial statements of your business present its affairs fairly in all material aspects. This opinion embodies the assumptions that a business observed compliance with generally accepted accounting principles (GAAP) and statutory requirements. An opinion of this sort is known as a clean report; such a report implies that any changes in the accounting policies, their application, and effects, are adequately determined and divulged. This opinion does not offer a view on whether a business is in good economic health. It merely states that a business's financial reporting is transparent and thorough and has not hidden important facts.
Unqualified Report vs. Qualified Report
A qualified report is one in which the auditor concludes that most matters have been dealt with adequately, except for a few issues. An auditor’s report is qualified when there is either a limitation of scope in the auditor’s work or when there is a disagreement with management regarding application, acceptability or adequacy of accounting policies. For auditors, an issue must be material or financially worth consideration to qualify a report. The issue should not be pervasive, that is, the issue should not misrepresent the factual financial position. If issues are material and pervasive, the auditor issues a disclaimer or adverse opinion. A qualified audit report does not mean a business is suffering or in distress, and it doesn't mean that financial statements are not transparent. It merely reflects the auditor’s inability to give a clean report.