SA 705

Question 1

Pervasive?

Answer 1

• not confined to specific elts/acs/items in FS
• if confines, represent substantial portion of FS
• Disclosures,if fundamental to user’s understanding.

Question 2

Mgmt imposes limitation to obtain SAAE

Answer 2

• Likely - Qualified/Disclaimer of opinion
• request mgmt to remove
• mgmt refuses - go to TCWG
• Conclude - possible effects - material , not pervasive - qualify
• conclude - material & pervasive
  - withdraw fromaudit
  - withdrawl not practical,disclaim

Question 3

Limitations on scope of audit caused by :

Answer 3

• circumstances beyond the entity’s control
  - a/c record destroyed
  - seized by govt,
• circumstances relating to nature/timing of auditor’s work
  - not able to evaluate associate co.
  - SP - not sufficient;controls - not effective
  - timing of apptmt-not able to verify phy count
• limitations by mgmt
  - prevents auditor - phy count
  - prevents auditor - ext confirmation