An entity is facing significant litigation as a result of dumping oil in the ocean.This is adequately disclosed in the notes to the financial report.The appropriate auditor's report is:
A)a qualified opinion.
B)an unmodified opinion with an Other Matter paragraph.
C)an adverse opinion.
D)an unmodified opinion with an Emphasis of Matter paragraph.

Question

Quizplus · Accepted Answer

The best choice is an unmodified opinion with an Emphasis of Matter paragraph. This is because the disclosure of the significant litigation is adequately presented in the notes to the financial report, indicating that the financial statements are fairly presented in all material respects. However, the auditor should provide an Emphasis of Matter paragraph to draw readers' attention to the matter disclosed in the notes. This type of report is appropriate when the matter is adequately disclosed, but the auditor wants to make sure that readers of the financial statements are aware of it.

An Entity Is Facing Significant Litigation as a Result of Dumping