How do you differentiate between an adverse opinion and a disclaimer?

A ‘clean’ or ‘unmodified’ opinion arises if the auditor believes the statements fairly and accurately present the financial position, in accordance with generally accepted accounting principles.

A ‘qualified’ opinion is the next step down, which may note exceptions to the overall ‘fair presentation,’ which can include the scope of the audit.

AN adverse opinion is used only when the auditor believes that the overall financial statements are so materially misstated or misleading that they do not present fairly the financial position or results of operations and cash flows in conformity with GAAP/IFRS. A Disclaimer of opinion is used when the auditor has been unable to satisfy himself or herself that the overall financial statements are fairly presented. The necessarily for disclaiming an opinion may arise because of severe limitation on the scope of the audit or a nonindependence relationship under the Code of Professional Conduct between the auditor and the client. The disclaimer is distinguished from an adverse opinion in that it can arise only from lack of knowledge by the auditor, whereas to express an adverse opinion, the auditor must have the knowledge that the financial statements are not fairly stated. Both are used only when the condition is highly material.

1. An adverse opinion is given when the financial statements are materially misstated  and the is material and pervasive.

2. A disclaimer of opinion is given when the auditor is unable to obtain sufficient appropriate audit evidence , that is there is  a limitation of scope and the Material and pervasive.