Most audit reports on financial statements give the business a good health condition, or clean opinion. At the other end of the spectrum, the auditor may determine that financial statements are misleading and should not be relied upon. This negative audit report is called a negative opinion. It's big stick that auditors. They have a lot to the company's accounts of the negative opinion and no business wants that. The threat of an adverse opinion almost always motivates auditor business retreat and change their accounting or disclosure, to avoid getting the kiss of death a negative opinion. Adverse audit opinion says that the company financial statements are misleading. SEC does not allow negative opinions by auditors of public companies that would suspend trading in the company's share of stock if the company received an adverse opinion by its auditor CPA.
One change in auditor's message is very serious - if the CPA firm says it has serious doubts about the ability of the company to continue its operations. The firm is a business that has sufficient resources and momentum to continue, it is usual for the foreseeable future and would be able to absorb a bad turn of events without having to meet its obligations. The firm does not face imminent financial crisis or a pressing financial need. Business may be in some financial difficulty, but still considers the duration. Unless the contrary is proved, the CPA auditor assumes that business is a thriving business. If an auditor has serious concerns about whether the business is a going concern, these doubts are explained in the auditor's report.
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