How would each of the following paragraphs affect an audit opinion that is included in an auditor’s report?Emphasis of matter paragraphOther matter paragraph<br /> A. a. 2 would result in modified opinion, 1 would have no effect <br />B. b. Neither 1 nor 2 would affect the audit opinion <br />C. c. Both 1 and 2 would result in a modified opinion <br />D. d. 1 would result in modified opinion, 2 would have no effect
Question
How would each of the following paragraphs affect an audit opinion that is included in an auditor’s report?Emphasis of matter paragraphOther matter paragraph<br /> A. a. 2 would result in modified opinion, 1 would have no effect <br />B. b. Neither 1 nor 2 would affect the audit opinion <br />C. c. Both 1 and 2 would result in a modified opinion <br />D. d. 1 would result in modified opinion, 2 would have no effect
Solution
The effect of an "Emphasis of Matter" paragraph and an "Other Matter" paragraph on an audit opinion depends on the specific circumstances of the audit.
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An "Emphasis of Matter" paragraph is used by auditors to draw attention to a matter that has been appropriately presented or disclosed in the financial statements but is of such importance that it is fundamental to users' understanding of the financial statements. This does not modify the audit opinion.
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An "Other Matter" paragraph is used by auditors to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor's judgment, is relevant to users' understanding of the audit, the auditor's responsibilities, or the auditor's report. This also does not modify the audit opinion.
Therefore, the correct answer is B. Neither 1 nor 2 would affect the audit opinion.
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