Final answer:
An auditor should provide a modified opinion when the financial statements are materially misstated, indicating significant inaccuracies in financial reporting.
Step-by-step explanation:
An auditor should give a modified opinion when the financial statements are materially misstated. This means that the information presented is not accurate enough to reflect the true financial position, results of operations, and cash flows of the entity to a reasonable reader.
The purpose of an audit is to provide reasonable assurance that the financial statements are free from material misstatement. A modified opinion is necessary when this is not the case, despite the fact that the statements were prepared by management and there might be no concerns regarding internal controls.