Unqualified reports Under what circumstances would an auditor issue an unqualified opinion modified by an explanatory paragraph? Would the paragraph go before or after the opinion paragraph?
An explanatory paragraph would be added to an otherwise unqualified report when:
? The client has changed an accounting principle or method of application that has a material effect on the financial statements, but such change is in accordance with GAAP.
? A justified departure from GAAP.
? The auditor has significant doubt about whether the client can continue as a going concern.
? The auditor wishes to emphasize some matter.
For consistency, going concern, and for emphasis of a matter, such as an uncertainty, the explanatory paragraph would go after the opinion paragraph, while for justified departure from GAAP the explanatory paragraph can go before or after the opinion paragraph.
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