An Auditor Includes a Separate Paragraph in an Otherwise Unmodified

question 3

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:

Recession

Cyclical economic contraction that lasts for six months or longer.

Deregulation

Regulatory trend toward elimination of legal restraints on competition in industries previously served by a single firm in an attempt to improve customer service and lower prices through increased competition.

Regulated Monopolies

Monopolies that are allowed to exist by the government but with restricted and controlled powers to prevent unfair practices.

Cyclically Unemployed

Individuals who are without jobs due to the downturns in the business cycle, rather than through personal choice, often temporary and affected by economic recessions.