An auditor includes a separate paragraph in an otherwise unmodified report to emphasize that the entity being reported on had significant transactions with related parties. The inclusion of this separate paragraph:
A)is considered an "except for" 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 negate the unqualified opinion.

Question

Quizplus · Accepted Answer

Including a separate paragraph to emphasize significant related party transactions is a required disclosure under auditing standards, and thus, would not negate the unqualified opinion. This disclosure helps ensure that financial statement users are aware of the potential for conflicts of interest and the risks associated with related party transactions. The auditor may also include this information in the footnotes, but a separate paragraph may provide greater emphasis and clarity.

An Auditor Includes a Separate Paragraph in an Otherwise Unmodified