Unqualified Audit Opinion:
This happens when auditors examine the entity’s financial statements and conclude their opinion on the financial statements that no material misstatement is found. This opinion is different from a qualified opinion.
The unqualified audit opinion is the opinion that issue by auditors in their audit report on the financial statements when those financial statements are prepared and presented in all material respect and compliance with applicable accounting standards.
Unqualified opinion, however, is the term used to describe unmodified audit opinion.
For example, if you look into ISA 700, Forming Unmodified audit opinion, and searching for word unqualified opinion, then you will never found it.
The thing is that standards use words unmodified, but we normally use words unqualified or unmodified.
When the audit opinion expresses an unqualified opinion, that means the level of integrity of financial statements and management who oversees the entity is also better than modified audit opinion.
This might be helped management to obtain more funds from shareholders, investors, and banks.
Qualified Audit Opinion:
The qualified audit opinion is a type of audit opinion where opinion is modified from the standard opinion as the result of financial statements are not present true and fair or not fairly present in accordance with the standard and application framework.
Normally, if the result of audit testing found that the financial statements are a present true and fair view, then the standard unmodified opinion will be issued.
But, if the testing result found there are material misstatements, the auditor will need to modify its opinion.
The qualified audit opinion is not a good report to the company and management as the qualified opinion may lead the users to question the integrity of the entity’s financial statements and management.
The audit report will be issued to those charged with governance as well as investors and shareholders—this group of stakeholders questions management as the result of the qualified audit opinion.
Sometimes, suppose the bankers also need this report to assess the entity’s financial stability and integrity management. In that case, the bankers might not provide the loan to the entity or stop extending some term with the entity.