Qualified vs. Adverse Auditor's Opinions?

Answer: Most credit professionals review the auditors' opinion letter that accompanies audited financial statements, but there may be some confusion between a Qualified Opinion on one hand, and an Adverse Opinion on the other. A Qualified Opinion expresses qualifications [concerns] about either the scope of the audit or the fairness of the data presented in the financial statements. However, an Adverse Opinion issued by an independent CPA firm is of even greater concern to the reader. An adverse opinion letter will indicate that the auditors believe that the statements as presented do not represent fairly the financial condition of the company under review. Auditors will provide a detailed explanation of the reason or reasons for issuing an adverse opinion.