An auditors report for financial statements prepared using the special purpose framework of the cash basis of accounting contains the following title and sentences:

Basis of Accounting

We draw attention to Note X of the financial statements, which describes the basis of accounting. The financial statements are prepared on the cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

This title and sentences:

1. Are an improper form of reporting.

2. Represent an emphasis-of-matter paragraph.

3. Represent an other-matter paragraph.

D: Should appear prior to the opinion paragraph and explain the reason for a modified opinion.

Please provide explanations.