Can a company receive an unqualified opinion on the audit of its external financial statements if it receives an adverse opinion on its internal control over financial reporting from its independent auditor?
A company CAN receive an adverse opinion on the effectiveness of internal control and still receive an unqualified opinion on the financial statements from the independent auditor.
By expanding the scope of testing of account balances and disclosures or by altering the audit approach in the area affected by the weakness, the auditor may be able to conclude that the financial statements are fairly stated.
However, whether management or the auditor identifies a material weakness, management continues to be responsible for the internal control and the preparation of complete and accurate financial statements. Therefore, management should take whatever necessary steps to compensate for the material weakness in the internal control and financial statements preparation process.
