When is a modified report with an unmodified opinion typically issued?

A modified report with an unmodified opinion is issued when the financial statements present a true and fair view, but there are still important matters that the auditor believes should be communicated to users. This situation often arises in cases where the auditor needs to highlight certain issues, such as significant risks or unusual transactions, that are relevant to users' understanding of the financial statements, but these issues do not affect the overall opinion of the auditor regarding the truth and fairness of those statements.

In this circumstance, the auditor may include an additional paragraph in the report to provide these important communications while still concluding that the financial statements are presented fairly according to the applicable financial reporting framework. This allows the users to be aware of certain nuances that might be important for their interpretation or analysis of the financial statements.

For the other options, they either describe situations where the financial statements do not meet the criteria for an unmodified opinion or focus on lack of communication which is not relevant to the issuance of a report.