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A limitation on the scope of an auditor's examination sufficient to preclude an unqualified opinion will usually result when management:

A)   Presents financial statements that are prepared in accordance with the cash receipts and disbursements basis of accounting.

B)   States that the financial statements are not intended to be presented in conformity with generally accepted accounting principles.

C)   Does not make the minutes of the Board of Directors' meetings available to the auditor.

D)  Asks the auditor to report on the balance sheet and not on the other basic financial statements.


Reply below with your choice, and explain if you are so inclined, then go ahead and view the detailed answer:

Tags: AUD, MCQ

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Replies to This Discussion

C is correct coz A,B,D is not a scope limitation

C is correct because reviewing the minutes of those in charge of governance is an important part of gaining knowledge of the company which can be used to draw an opinion about the control environment.  Board of directors' meeting minutes are also an important place for the auditor to discover information and decisions that may be relevant to the audit in other ways--possible going concern issues or legal issues, for example.

A is incorrect because using a non-GAAP OCBOA is a GAAP problem, not a scope problem.

B is incorrect because...well, obviously this is a GAAP problem.  It's in the answer itself!

D is incorrect as this is simply a limited reporting engagement.  The only sticking point is whether or not the client allows the auditor full access to the all of the underlying financial data, not just that specifically related to the balance sheet.  As long as that is true, there is no issue here.  If it isn't true, then I think the auditor would probably have to withdraw from the engagement completely, though I'm not sure about that.


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