The auditors include an emphasis-of-matter paragraph in an otherwise unmodified report on the entity's financial statements to emphasize that the entity being reported on had significant transactions with related parties. The inclusifis considered a qualification of the opinion.on of this separate paragraph
A)is considered a qualification of the opinion.
B)violates generally accepted auditing standards if this information is already disclosed in footnotes to the financial statements.
C)necessitates a revision of the Opinion Section to include the phrase "with the foregoing explanation."
D)is appropriate and would not otherwise affect the unmodified opinion.

Question

Quizplus · Accepted Answer

The inclusion of an emphasis-of-matter paragraph in an otherwise unmodified report does not affect the opinion. It is used to draw attention to a matter that is already disclosed in the financial statements or to provide additional information that the auditor believes is important. The fact that significant transactions were conducted with related parties is a relevant and material matter that should be brought to the attention of users of the financial statements, and the inclusion of the emphasis-of-matter paragraph is appropriate in this case. It does not qualify the opinion, but rather enhances the overall transparency of the audit report. The fact that the information is disclosed in footnotes to the financial statements does not preclude the auditor from including an emphasis-of-matter paragraph in the audit report.

The Auditors Include an Emphasis-Of-Matter Paragraph in an Otherwise Unmodified