Clean Report: A clean Report which is otherwise known as unconditional opinion is issued by the auditor when he does not have any reservation with regard to the matters contained in the financial statement. In such a case the audit report may state that the financial statements give a true and fair view of the state of affairs and profit and loss account for the period.
Qualified Report: Qualified Audit Report is one which does not give a clear chit about the truth and fairness of the financial statements but makes certain reservations. The gravity of such reservations will vary depending upon the circumstances. In majority of cases, items which are the subject matter of qualification are not so material as to affect the truth and fairness of the whole accounts but merely creates uncertainty about a particular item. In such cases it is possible for the auditors to report that in their opinion but subject to specific qualifications mentioned, the accounts present a true and fair view. Thus, an auditor may give his particular objection or reservation in the audit report and state “subject to the above, we report that balance sheet show a true and fair view …..”. The auditor must clearly express the nature of qualification in the report. The auditor should also give reasons for qualification.