Question

changes in recharges in reporting entities, such as the inclusion of an additional company in combined financial statements, affect comparability but not consistency, and therefore do not require an explanatory paragraph in the audit report.

a false
b true

Answer 1

Answer :-

The audit should include an explanatory paragraph in an unmodified opinion audit report when the audit is completed with satisfactory results and the financial statements are fairly presented, but the auditor believes it is important to draw the reader's attention to certain matters.

In the given case changes in reporting entities also change in the comparability of company combined financial statements but not the consistency. So this is not required explanatory paragraph.

So, this statement is true.

Correct answer is option "b" true.

Thank you.