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Auditor opinion

The independent auditor's formal statement on whether the financial statements are fairly presented, printed at the front of the annual report.

An unqualified or clean opinion is the norm and says the statements are fairly presented in all material respects. Anything else, whether a qualification, a disclaimer or an adverse opinion, is rare and serious.

Modern reports also list critical audit matters: the areas the auditor found most difficult and judgemental. That list is a free, expert-written map of where a company's earnings-quality risk actually sits, and very few investors read it.

Example: Northwind's auditor issues a clean opinion and flags two critical audit matters: the valuation of the Cloud reporting unit's goodwill and the warranty reserve estimate.

Related: going-concern, restatement, earnings-quality, form-10-k, footnotes

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