Has the SEC ever been Willing to Accept Qualified Audit Opinions for a GAAP Depature? | Weatherhead School at Case Western Reserve University

Has the SEC ever been Willing to Accept Qualified Audit Opinions for a GAAP Depature?

Has the SEC ever been Willing to Accept Qualified Audit Opinions for a GAAP Depature?

Authors

Published

Accounting Historians Journal, vol. 49, issue 1, pp. 29-37, June 2022

Website

http:// doi.org/10.2308/AAHJ-2021-012

Abstract

Auditing standards promulgated by the Public Company Accounting Oversight Board (PCAOB) outline four alternatives for auditors’ reports: unqualified, qualified, adverse, and disclaimer. However, at the present time, the Securities and Exchange Commission (SEC) generally accepts only one of these alternatives: an unqualified opinion. Prior to the elimination of “subject to” qualified opinions in 1988, the SEC allowed such opinions in the case of material uncertainties.However, the SEC has not, as a general rule, accepted opinions qualified for departures from generally accepted accounting principles (GAAP) since it issued Accounting Series Release (ASR) No. 4 on April 25, 1938. This paper describes the one instance where the SEC agreed to accept opinions qualified for a departure from compliance with GAAP.