Adverse opinion
In one sentenceAn opinion the auditor gives on finding material and pervasive misstatements that make the financial statements as a whole not fairly presented.
Simply put
An adverse opinion is the most severe opinion: the auditor says plainly that the statements cannot be relied on.
It happens when the misstatements are large and affect many items, and management refuses to correct them.
Example
A company recorded large revenues from contracts not yet performed, which affected revenue, receivables and profit together, and refused to adjust them: an adverse opinion was issued.
Don't confuse it with
Disclaimer of opinionAn adverse opinion means the auditor confirmed that misstatements exist, while a disclaimer means the auditor could not obtain sufficient evidence in the first place.