Types of qualification audit reports

Written by osmond vitez
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Types of qualification audit reports
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Audit reports are the final step of the auditing process. Auditors issue reports for internal and external business stakeholders to assess the company's financial information. These reports can be positive or negative for a company. Negative audit reports are commonly known as qualified reports, which include reasons for the negative audit report. Companies typically have an opportunity to have a remedial audit, too, which can supersede the initial audit report.


Qualified audit reports may have a qualification known as a deviation from accounting standards. A deviation from standards indicates one or more issues that exist on a company's financial statement that do not meet national accounting standards. A single deviation usually does not mean the entire accounting process or financial statements are completely inaccurate. Auditors will list the deviation in their report so stakeholders have an understanding for the qualified report and what the company must do to correct the situation.

Limitation of Scope

A limitation of scope qualification indicates that auditors could not complete a full review on the company's financial statements. Similar to the deviation qualification, auditors will outline the limitation of scope in the audit report for users of the audit report. Auditors typically include more detail with this qualification since these issues require more information to explain the reason for the qualification. Several limitations of scope can exist in one audit report, where auditors must outline each qualification regarding limitations.


Qualified audit reports usually result in a remedial audit for a company. Companies must make corrections to their business operations and undergo a remedial audit. Remedial audits test only the areas needing corrections. This audit provides additional information for business stakeholders about the company's new processes regarding business or financial operations.

Publicly held companies must go through this process to remain in compliance with regulatory agencies. Once the remedial audit is passed, auditors can issue a nonqualified opinion on the company's operations.

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