The purpose of this study is to investigate the effect of managerial caution on significant distortions of the auditors' report adjustment basis and also to investigate the moderating effect of managerial ability on this relationship. The data used include 130 companies listed on the Tehran Stock Exchange during the years 2014 to 2020. Logistic regression model based on panel data was used to analyze the data and test the hypotheses. The results of testing the research hypotheses show that managerial caution has a positive effect on significant distortions of the auditor's report. The present study also shows that the manager's ability has a positive effect on significant distortions of the auditor's report adjustment basis, which supports from an opportunistic perspective of the manager's ability. This view has received less attention in related research. Finally, the moderating effect of manager's ability on the relationship between managerial caution and significant distortions of the auditor's report adjustment basis was examined and not confirmed. Conclusion: the ability of the manager has a positive effect on significant distortions of the auditor's report adjustment basis, but cannot moderate the relationship between managerial caution and significant distortions. This finding shows that the positive effect of caution actions on investment efficiency and improving the performance of companies, which has been confirmed in previous research, is changing in inflationary economies such as Iran.