The auditors include an emphasis-of-matter paragraph in an audit 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

Including an emphasis-of-matter paragraph to highlight a particular matter does not negate the unmodified opinion as long as the auditors' assessment of the financial statements remains unmodified. It is considered appropriate to include such a paragraph to provide readers with an additional explanation or detail regarding the financial statements being reported upon.

The Auditors Include an Emphasis-Of-Matter Paragraph in an Audit Report