Final answer:
An auditor issues a qualified opinion with an explanatory paragraph when material uncertainties are not adequately disclosed in the financial statements. However, when such uncertainties are properly disclosed, an unmodified opinion with an explanatory paragraph may be issued.
Step-by-step explanation:
It is false that an auditor should issue a qualified opinion with an explanatory paragraph whenever there is a material uncertainty affecting the financial statements.
In a situation where material uncertainty exists, and those uncertainties are adequately disclosed in the financial statements, the auditor may still issue an unmodified opinion with an explanatory paragraph highlighting the uncertainty. If the uncertainties are not adequately disclosed, then the auditor may issue a qualified opinion or a disclaimer of opinion depending on the situation.
The explanatory paragraph for material uncertainty is intended to draw attention to a matter appropriately presented or disclosed in the financial statements that is of such importance that it is fundamental to users' understanding of the financial statements. Thus, the opinion issued depends on whether these uncertainties are properly acknowledged within the statements themselves.