Final answer:
When there is a GAAP violation that is immaterial, the audit report is not affected. When there is a material violation, the audit report is modified to include a qualified opinion. When there is a pervasive GAAP violation, the audit report is modified to include an adverse opinion.
Step-by-step explanation:
When there is a GAAP violation that is immaterial, it means that the violation is not significant enough to impact the overall financial statements.
In this case, the audit report is not affected and the auditor can issue an unqualified opinion, indicating that the financial statements are free from material misstatements.
On the other hand, when there is a GAAP violation that is material, it means that the violation is significant enough to impact the overall financial statements.
In this case, the audit report is modified to include a qualified opinion. A qualified opinion indicates that the financial statements are fairly presented, except for the specific violation.
Lastly, when there is a pervasive GAAP violation, it means that the violation is widespread and affects multiple aspects of the financial statements.
In this case, the audit report is modified to include an adverse opinion. An adverse opinion indicates that the financial statements are not fairly presented.