Which statement correctly pairs the opinion with its description?

• A. Modified Opinion - The pervasiveness of misstatements qualifies the type of opinion.
• B. Qualified Opinion - Misstatements are material and pervasive.
• C. Adverse Opinion - No opinion is rendered because the auditor cannot obtain sufficient evidence.
• D. Disclaimer of Opinion - Misstatements are material but not pervasive.

Answer: (A)

Understanding how auditors choose an opinion hinges on materiality and pervasiveness of misstatements. When misstatements are material but not pervasive, the auditor issues a qualified opinion. If those misstatements are material and pervasive, the opinion becomes adverse. A disclaimer comes into play when the auditor cannot obtain sufficient evidence due to scope limitations, not simply because of misstatements.

The statement in question captures this idea: the form of a modified opinion is guided by how pervasive the misstatements are. The more pervasive the misstatements, the stronger the modification (moving toward adverse). The other descriptions don’t line up with how these opinions are actually defined. For example, misstatements that are material and pervasive correspond to an adverse opinion, not a qualified one; lacking sufficient evidence leads to a disclaimer, not a statement about misstatements being present but not pervasive; and material but pervasive misstatements do not describe a qualified opinion.