An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements. If the auditor concludes that the financial statements do not require revision, but the entity refuses to revise or eliminate the material inconsistency, the auditor may

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An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements. If the auditor concludes that the financial statements do not require revision, but the entity refuses to revise or eliminate the material inconsistency, the auditor may

A. Issue an “except for” qualified opinion after discussing the matter with the entity’s board of directors.
B. Consider the matter closed since the other information is not in the audited financial statements.
C. Disclaim an opinion on the financial statements after explaining the material inconsistency in a separate explanatory/emphasis-of-matter paragraph.
D. Revise the auditor’s report to include a separate explanatory/emphasis-of- matter paragraph describing the material inconsistency.

Answer: Revise the auditor’s report to include a separate explanatory/emphasis-of- matter paragraph describing the material inconsistency.

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