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 inclusion 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 paragraph 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 on the entity's financial statements to emphasize that the entity being reported on had significant transactions with related parties is appropriate and would not otherwise affect the unmodified opinion. This paragraph is not considered to be a qualification of the opinion and does not violate generally accepted auditing standards as it provides additional information to the users of the financial statements. There is no need to revise the opinion paragraph to include the phrase "with the foregoing explanation."

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