Most audit reports on financial statements give the business a clean bill of health, or a clean opinion. At the other end of the spectrum, the auditor may state that the financial statements are as such misleading together with should not specifically be relied upon. This negative audit report is actually called an adverse opinion. That’s the big stick that auditors carry.

They have the power to give a company’s financial statements an adverse view and no business wants that. The threat of an adverse opinion almost always motivates a Small Business Accounting Software business to give way to the auditor and change its accounting or disclosure in order to avoid getting the kiss of death of an adverse opinion. An adverse audit opinion says that the financial statements of the business are generally deceptive. The SEC does not tolerate adverse opinions by auditors of public businesses; it would suspend trading in a company’s stock share if actually the company received an adverse opinion from its CPA auditor.

One modification to an auditor’s report is very crucial – when the CPA firm says that it has important doubts about the capability of the business to continue as a going concern. A going concern is actually a Small Business Accounting Software business that has as a matter of fact sufficient financial wherewithal and momentum to continue it normal operations into the foreseeable future and would be able to absorb a bad turn of events without having to default on its liabilities. A going concern does not exactly face an imminent financial crisis or any pressing financial emergency.

A business could be under some financial distress but overall still be judged a going concern. Unless there is usually evidence to the contrary, the CPA auditor assumes that the business is actually a going concern.

If an auditor has serious concerns about whether the Small Business Accounting Software business is basically a going concern, these doubts are spelled out in the auditor’s report.

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