Adverse opinion

An adverse opinion is expressed when the auditor has obtained sufficient appropriate evidence and concludes that misstatements are both material and pervasive to the financial statements. The auditor explains the basis for the adverse opinion in the report. The conclusion follows from a known material misstatement, not merely missing evidence. Pervasive effects may be widespread, represent a substantial proportion of the statements, or relate to disclosures fundamental to users’ understanding. The auditor explains the identified misstatement and its effects where practicable.