The Auditors Include an Emphasis-Of-Matter Paragraph in a Nonpublic Company

question 48

Multiple Choice

The auditors include an emphasis-of-matter paragraph in a nonpublic company 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."

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Definitions:

Market Equilibrium

A situation where the supply of a good or service is equal to the demand for it, resulting in stable prices.

Homogeneous Products

Goods that are perfectly identical in quality, size, and features, making them indistinguishable to consumers from multiple producers.

Luxury Yachts

Luxury yachts are high-end, luxurious boats that are often equipped with sophisticated amenities and are used for personal or commercial pleasure.

Cartel Members

Firms or countries that collaborate to control prices and production in an industry, acting together rather than competing, often to maximize collective profits.