Audit Report Types

Types of Audit Reports Opinions

There are four different types of the audit report opinion which can be issued by the auditor of the company on the basis of the analysis of the company’s financial statements and includes Unqualified Audit Report, Qualified Audit Report, Adverse Audit Report, and Disclaimer Audit Report.

Audit Report is the base for determining the financial capacity and quality of the company. Also, one can consult the Audit report in measuring the performance of the company for the given fiscal year based on which investors will rely on the company and will invest their money for enhancing their returns.

Audit Report Types

You are free to use this image on your website, templates etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Audit Report Types (

If you want to learn more about Auditing, you may consider taking courses offered by Coursera

  1. Auditing I: Conceptual Foundations of Auditing
  2. Auditing II: The Practice of Auditing

Top 4 Audit Report Opinion Types

In the modern corporate world, based on the below audit opinion, types of the Audit report is determined:

Sr No.OpinionType of  Audit Report
1UnQualified OpinionClean Report
2Qualified OpinionQualified Report
3Disclaimer of OpinionDisclaimer Report
4Adverse OpinionAdverse Audit Report

Let’s understand each audit report opinion types with an example:

#1 – Clean Report

It is the most common type of opinion given by the auditors and always expected by the auditee. In this type of audit report, the advice given by the auditor will be Unqualified, without any kind of adverse comments or any sort of disclaimer about any clauses or process. As per auditor, by this report, they are satisfied with the company’s performance and finding the functions of the company in sync with governance and applicable statute.

Example: HSBC Bank-Calendar Year 2018- Unqualified/Clean Audit Report

In our opinion, HSBC (“The Company”) Group financial statements and parent company financial statements:

#2 – Qualified Opinion

This type of audit report, an auditor gives when he is not having confidence about any specific process or transaction, based on which they are not in the position to issue Clean/ Unqualified OpinionUnqualified OpinionAn unqualified opinion is concluded by an auditor appointed by the company after making substantial procedures to check the policies and procedures in place and collected optimum evidence that the organization does not include any material discrepancies or more. Qualified Opinion is not acceptable by investors and organizations as it creates a negative impression.

Example: General Format in the UK as per UK GAAP or IFRS

In our opinion, except for the effects of the matter described in the basis for qualified opinion sectionQualified Opinion SectionThe company's auditor issues a qualified opinion in the audit report if it is found that the company's financial statements are presented fairly, but with exceptions in specific areas. It is one level below a Unqualified Opinion (i.e. Clean Opinion) and is given when the Auditor believes the financial statement has not been prepared in accordance with the rules laid down under the provisions of GAAP or more, the financial statements:

  • Give an accurate and fair view of the state of the company’s affairs as at 31st Dec 2018 and of its profit for the year then ended;
  • Have adequately been prepared following the United Kingdom Generally Accepted Accounting Practice / IFRSs as adopted by the European Union; and
  • Have been prepared in accordance with the requirements of the Companies Act 2006.

A Basis for Qualified Opinion

The notes to the financial statements do not disclose that one of the company’s directors, John Smith, controls ABC Limited, from which the company purchased goods and services during the year of xxx. Such disclosure is required by IFRS 102 / IFRSs as adopted by the European Union].

We have audited as per International Standards on Auditing (UK) (ISAs (UK)) and applicable law. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion

#3 – Disclaimer Report

Disclaimer reports given by auditorsAuditorsAn auditor is a professional appointed by an enterprise for an independent analysis of their accounting records and financial statements. An auditor issues a report about the accuracy and reliability of financial statements based on the country's local operating more distances them from giving any kind of opinion on the financial statements. The main reason in providing the disclaimer of opinion can be reasons like putting a limitation on the scope of the auditors, not obtaining satisfactory explanation and not able to determine the true nature of transactions, not able to obtain sufficient audit evidenceAudit EvidenceAudit evidence is information gathered by auditors during the course of an audit, whether internal, statutory, or otherwise. These facts serve as the foundation for the opinion in the audit more, etc. This kind of audit opinion is considered very harsh and creates a very adverse image of the company.

Example General Format in the UK as per UK GAAP or IFRS

We do not express an opinion on the accompanying financial statements of the company. Because of the significance of the matter described in the basis for the disclaimer of the opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

A Basis for Disclaimer of Opinion

We are also unable to confirm the bank balance (including overdraft) and interest payableInterest PayableInterest Payable is the amount of expense that has been incurred but not yet paid. It is a liability that appears on the company's balance more thereon since the accounts are freeze by statutory authorities on account of the non-deposition of the statutory dues. As a result, the facility ceases to be operational, and the same matter was reported in the previous year.

In addition, we were unable to verify by alternative means balance of accounts receivableBalance Of Accounts ReceivableAccounts receivables is the money owed to a business by clients for which the business has given services or delivered a product but has not yet collected payment. They are categorized as current assets on the balance sheet as the payments expected within a year. read more and balance of accounts payable and corresponding translation gain or loss, if any on theses balance is not recorded for the year ended 31st Dec 2018 and same matters were reported in a previous year.

#4 – Adverse Audit Report

An auditor gives an adverse report when he is not at all satisfied with the financial statements, or there is a high level of material misstatements, irregularities that can breach the trust of investors and government. Qualified reports are considered as the primary weapon of the auditor, which they can use as public accountability, and as a responsible professional, the auditor can attract the attention of the public about any kind of non-acceptable approach accepted by the companies.

Example: General Format in the UK as per UK GAAP or IFRS

In our opinion, because of the lacking of the information mentioned in the basis for Adverse OpinionAdverse OpinionAn adverse opinion is the auditor's findings of misrepresentation and misstatement of the company's financial health and performance as identified in the financial statements. It is the conclusion of the professional assessment of the corporate accounts depicting false or unfair business more paragraph, the financial statements do not present the information required by the Companies Act, 2006, as required and also do not give a true and fair view in line of the UK GAAP or IFRS, that state of affairs of the company as at 31st Dec 2018, and its profit/loss and its cash flows for the year ended on that date.

A Basis for Adverse Opinion

The company’s borrowings have got matured, and the amount outstanding is payable on 31st Mar 2019. The company is not able to take loans, and there are chances of defaulting. These events indicate a material uncertainty about the company’s ability to continue its going concern assumption and, therefore, there are high chances of realizing funds from the sale of assets and payout its liabilities in the continuation of the business. The financial statementsFinancial StatementsFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all more (and notes thereto) do not disclose this fact.


Based on the facts and circumstances of each type of audit assignments, the auditor is needed to modify its opinion by taking professional judgments and acceptable legal opinion.

This has been a guide to Audit Report Types. Here we discuss the top 4 audit report opinion types, including Clean Report, Qualified Report, Disclaimer Report, and Adverse Audit Report. You may learn more about Accounting from the following articles –