Detailed Answer
(b) The requirement is to identify the situation in which
an emphasis-of-matter paragraph may be added to an unmodified
report. Answer (b) is correct because substantial doubt about
the entity’s ability to continue as a going concern leads to either
an unmodified report with an emphasis-of-matter paragraph or a
disclaimer of opinion. Answer (a) is incorrect because an auditor
may issue an opinion on a balance sheet without reporting on the
other basic financial statements. Answer (c) is incorrect because
unreasonable estimates lead to either a qualified or an adverse
opinion. Answer (d) is incorrect because inadequate management
record retention policies are a scope limitation that may result
in a qualified opinion or a disclaimer.