Which of the following statements about modifications to the audit report and opinions is not true?

• A. An addition of another paragraph to an otherwise standard audit report always requires a modification of an unqualified opinion
• B. A one-paragraph report is generally used when the auditor is not independent
• C. A modification of the audit report that involves modified wordings may contain an unqualified opinion
• D. An unqualified opinion may be issued though the audit report requires an additional explanatory paragraph

Answer: (A)

The main idea here is that adding an explanatory paragraph to an audit report does not automatically change the auditor’s opinion. An emphasis-of-matter or other-matter paragraph can be included to draw attention to a particular issue or to disclose information that is not pervasive enough to undermine the financial statements, and the opinion can remain unmodified if the matter is adequately disclosed and does not indicate that the statements are misstated or that the auditor’s ability to perform the audit was compromised.

Only if the matter is material enough to affect the financial statements as a whole or the scope of the audit would a modification to the opinion be required (resulting in a qualified, adverse, or disclaimer of opinion). For example, a going-concern note or other important disclosure can be added in a separate paragraph while still maintaining an unmodified opinion if the issue is adequately disclosed and the financial statements are otherwise fairly presented.

So, the statement that adding another paragraph to an otherwise standard audit report “always requires” a modification to an unqualified opinion is not true. The presence of an extra paragraph does not by itself determine the opinion; the content and materiality of the matter determine whether the opinion must be modified.