This study is unique in that it focuses on firms that received adverse opinions in one year, followed by an unqualified opinion in the next, isolating the sample from firms with longstanding or endemic internal control weaknesses.
We extend this line of research by focusing on a sample of firms that received an adverse opinion on internal controls, and examine the specific factors that affect auditor turnover, including the severity and nature of the internal control deficiencies, the amount of auditor-related fees, the length of the auditor-client relationship, and the type of audit firm that expressed the negative opinion.
However, while some people may expect a certain level of adverse opinions to be issued by companies, others may overreact if they are surprised by such opinions.
As noted earlier, Turley has warned that there is the potential for many more material weaknesses to be reported and adverse opinions issued than perhaps anyone imagined.
Schvaneveldt & Company's report on our financial statements as of February 28, 1999 and 1998 and for the two years in the period ended February 28, 1999, as well as their report on our financial statements for the three-month period ended May 31, 1999, did not contain any adverse opinions
or disclaimers of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.
The Big 4 accounting firm that has issued the largest number of adverse opinions
is PricewaterhouseCoopers, which failed 9.
In both the qualified and adverse opinions, the auditor will include in the opinion the departure from GAAP and will quantify the amounts involved, if determinable.
Baker adds that while it is not unreasonable to ask a banker to accept a qualified or adverse opinion, it's not a good long-term solution.
Estimates on the number of companies that might fail the SOX 404 test have varied widely, with most predicting that 10 percent may receive adverse opinions by auditors.
BOSTON -- According to a review of internal control disclosures made during the month of January 2005, several companies disclosed that their internal control over financial reporting was not effective as of their fiscal year end, and that they expected their auditor would issue an adverse opinion on the effectiveness of those controls.
Explore the reality that a very large percentage of these weaknesses/deficiencies may be remediable and that there is a high probability that the system will experience a one-time bulge of adverse opinions
that will not be repeated on a going forward basis.
based public companies will not meet the deadline and could face adverse opinions," says Francine McKenna, Founder and President of Chicago-based consulting firm, McKenna Partners.
If these are not corrected by the deadline, their presence could force auditors to give adverse opinions on those companies' financial statements.
Plante & Moran's reports on the consolidated financial statements of the Corporation for each of the fiscal years ended March 31, 2001, March 31, 2002 and the nine month period ending December 31, 2002 contained no adverse opinions
or disclaimers of opinion, and none were qualified or modified as to uncertainty, audit scope or accounting principles.
Form 8K being filed with the SEC states the decision to change auditors was by "mutual understanding" and that there are no adverse opinions
or disagreements of accounting principles related to either prior or current accounting periods.