An auditor includes a separate paragraph in an otherwise unmodified report to emphasize that the entity being reported on had significant transactions with related parties. The inclusion of this separate paragraph
- Is considered an “except for” qualification of the opinion.
- Violates generally accepted auditing standards if this information is already disclosed in footnotes to the financial statements.
- Necessitates a revision of the opinion paragraph to include the phrase “with the foregoing explanation.”
- Is appropriate and would not negate the unqualified opinion.