Final answer:
An auditor adds an explanatory paragraph to emphasize a matter of importance in the financial statements without modifying the audit opinion. The correct answer is option c: No qualification, but with an explanatory paragraph after the opinion paragraph.
Step-by-step explanation:
When an auditor wishes to emphasize a particular matter without modifying the opinion on the financial statements, an explanatory paragraph is added. This does not constitute a qualification but serves to draw attention to the matter which is deemed to be of importance to the users of the financial statements. The correct option that reflects this situation is therefore option c: A Qualification: No; An Explanatory Paragraph After the Opinion Paragraph: Yes.
In contrast, a qualification in an audit report implies that the financial statements may not be entirely by generally accepted accounting principles (GAAP), or that the auditor has not been able to obtain sufficient appropriate audit evidence on which to base the opinion. This is different from the inclusion of an explanatory paragraph to emphasize a matter that the auditor believes is important but does not affect the auditor's opinion on the financial statements.