An auditor decides to express a qualified opinion on an entity's financial statements because a major inadequacy in its computerized accounting records prevents the auditor from applying necessary procedures. The opinion paragraph of the auditor's report should state that the qualification pertains toSelect one:a.A client-imposed scope limitation.b.The possible effects on the financial statements.c.Inadequate disclosure of necessary information.d.A departure from generally accepted auditing standards.
Question
An auditor decides to express a qualified opinion on an entity's financial statements because a major inadequacy in its computerized accounting records prevents the auditor from applying necessary procedures. The opinion paragraph of the auditor's report should state that the qualification pertains toSelect one:a.A client-imposed scope limitation.b.The possible effects on the financial statements.c.Inadequate disclosure of necessary information.d.A departure from generally accepted auditing standards.
Solution
The correct answer is a. A client-imposed scope limitation.
Here's why:
A qualified opinion is a statement issued after an audit is done by a professional auditor that suggests the information provided was limited in scope and/or the company being audited has not maintained GAAP accounting principles.
In this case, the major inadequacy in the entity's computerized accounting records that prevents the auditor from applying necessary procedures is a limitation in the scope of the audit. This limitation is imposed by the client's circumstances, not by the auditor. Therefore, the qualification pertains to a client-imposed scope limitation.
The other options are not correct because:
b. The possible effects on the financial statements - This would be a result of the scope limitation, not the reason for the qualification.
c. Inadequate disclosure of necessary information - This could be a result of the scope limitation, but it is not the direct reason for the qualification.
d. A departure from generally accepted auditing standards - This would be a reason for an adverse opinion, not a qualified opinion.
Similar Questions
An auditor may not express a qualified opinion whenSelect one:a.An accounting principles at variance with generally accepted accounting principles is used.b.The auditor lacks independence with respect to the audited entity.c.The auditor's report refers to the work of a specialist.d.A scope limitation prevents the auditor from completing an important audit procedure.
If the auditor believes that the entity will not be able to continue as a going concern and the financial statements are prepared on a going concern basis, the auditor's report should include:Select one:a.Unqualified opinion with explanatory paragraph.b.Qualified opinion.c.Adverse opinion.d.Disclaimer of opinion.
A standard unqualified audit report is not required to have which of the elements set out below?Group of answer choicesan opinion paragrapha heading ‘Auditors Opinion’matters the auditor wishes to emphasisethe opinion of the auditor on the financial statements
A statement that the auditor's responsibility is to express an opinion on the financial statements is contained in the:Select one:a.Opening paragraphb.Scope paragraphc.Opening and scope paragraphd.Opinion paragraph
f the previous period’s financial statements are unaudited, and sufficient appropriate evidence is unavailable, then the current auditor’s report will be:Group of answer choicesunqualified on the basis that the comparatives are unaudited and no opinion is expressed on themqualified on the basis that the comparatives are unaudited and no opinion is expressed onqualified on the basis of scope limitationqualified on the basis that the comparatives are unaudited and an opinion is expressed on them
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