Question

In which of the following situations would an auditor ordinarily issue an unqualified/unmodified financial statement audit opinion with no explanatory (or emphasis-of-matter/other matter) paragraph?

1) When there are material misstatements in the financial statements
2) When there are significant uncertainties in the financial statements
3) When there are limitations in the scope of the audit
4) When there are no material misstatements, uncertainties, or limitations in the financial statements

Answer 1

An auditor would issue an unqualified/unmodified opinion with no explanatory paragraph when the financial statements are free from material misstatements, uncertainties, or scope limitations

Step-by-step explanation:

An auditor would ordinarily issue an unqualified/unmodified financial statement audit opinion with no explanatory (or emphasis-of-matter/other matter) paragraph when there are no material misstatements, uncertainties, or limitations in the financial statements. Hence, the correct situation among the provided options is:

• When there are no material misstatements, uncertainties, or limitations in the financial statements

An unqualified/unmodified opinion is issued when an auditor concludes that the financial statements of a company are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. This is the most favorable opinion that an auditor can provide regarding a company's financial statements.