What is an Except-for Opinion?

An except-for opinion is rendered by an external auditor when unable to audit parts of a client's operations. The issue arises when management imposes restrictions or when other conditions occur that make it impossible to engage in certain auditing procedures. Under these circumstances, the auditor typically renders an opinion "except for" the conditions stated in a following paragraph of the opinion. Organizations try to avoid an except-for opinion, since it can be an indicator to outsiders that there are problems with their financial statements.

An except-for opinion is not as bad as an adverse opinion, where the auditor states that the client’s financial statements are not in conformity with generally accepted accounting principles. An except-for opinion is also not as bad as a disclaimer of opinion, in which the auditor cannot form an opinion regarding the fairness of the client’s financial statements.

Example of an Except-for Opinion

An example of the text that might be used in an auditor’s report for an except-for opinion is as follows:

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the financial statements present fairly, in all material respects, the financial position of Alpha Corporation as of December 31, 2025, and the results of its operations and its cash flows for the year then ended in accordance with Generally Accepted Accounting Principles.

Basis for Qualified Opinion:
The company has not capitalized lease obligations as required in ASC 842, which requires the recognition of lease assets and liabilities. Had the company capitalized the leases, total assets and liabilities would have increased by $1,200,000 and $900,000, respectively.