Qualified for Scope Limitation

Question 1

What type of report should the auditor express when a scope limitation is viewed as material but not pervasive?

Answer 1

Qualified opinion

Question 2

What type of report should the auditor express when a scope limitation is viewed as material and pervasive?

Answer 2

Disclaimer of opinion

Question 3

Give an example of the language used in an auditor’s report for a qualified opinion for a scope limitation when audited financial statements are unavailable for an investment accounted for by the equity method.

Answer 3

1. )”In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements referred to above present fairly. . .”
2. )The qualification (reservation) is the phrase “except for the possible effects of . . .”

Question 4

What is meant by the word “pervasive” in connection with audit reporting issues?

Answer 4

1. )Effects that are not confined to specific elements, accounts or items of the financial statements.
2. )Effects that, if so confined, represent or could represent a substantial proportion of the financial statements.
3. )Regarding disclosures, those that are fundamental to users’ understanding of the financial statements

Question 5

What is meant by a qualified opinion for a scope limitation?

Answer 5

The auditor is expressing one or more reservations (specifically about a scope limitation where the auditor was unable to perform a desired audit procedure) while still concluding that the financial statements, taken as a whole, are fairly stated and that, except for the specific matter referenced, the auditor has obtained sufficient, appropriate audit evidence as a reasonable basis for the auditor’s conclusions.