An Auditor Includes a Separate Paragraph in an Otherwise Unmodified

question 1046

Multiple Choice

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.

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Definitions:

Income from Operations

The profit derived from a company's regular business activities, excluding unique or extraordinary revenues and expenses.

Delivery Expense

Costs incurred by a company to transport its products to customers.

Merchandise to Customer

The process of selecting, packaging, and delivering goods to buyers as part of sales operations.

Inventory Shrinkage

The loss of products between purchase from the supplier and sale to the customer, often due to theft, damage, or errors in inventory management.