The auditors include an emphasis-of-matter paragraph in report with an unmodified opinion in order to emphasize that the entity being reported upon is a subsidiary of another business enterprise.The inclusion of this paragraph:
A)Is appropriate and would not negate the unmodified opinion.
B)Is considered a qualification of the opinion.
C)Is a violation of generally accepted reporting standards if this information is disclosed in notes to the financial statements.
D)Necessitates a revision of the opinion paragraph to include the phrase "with the foregoing explanation."

Question

Quizplus · Accepted Answer

The inclusion of an emphasis-of-matter paragraph is appropriate and does not negate the unmodified opinion. This type of paragraph is used to draw the reader's attention to a matter that is considered significant, but not to the extent of requiring a qualified or adverse opinion. It is not considered a qualification of the opinion and does not require a revision of the opinion paragraph. Disclosing this information in the notes to the financial statements would also not violate generally accepted reporting standards.

The Auditors Include an Emphasis-Of-Matter Paragraph in Report with an Unmodified