[oneFREAKINGpoint]

I’m using Becker and am a bit confused on reporting options for scope limitations. In A1 they talk about different audit opinions and it states you can issue a qualified or disclaimer for a scope limitation. But in A5 it states you should withdraw or disclaim an opinion if you have a scope limitation. I understand deliberate management imposed scope limitation is bad, representative of shady management, etc. and may merit withdrawal, but is there more to “disclaim v. qualify” other than severity of the scope limitation?

Can anyone shed some light on what nuances I’m missing here?

[Anonymous]

According to Yaeger, a situation-imposed scope limitation would most likely result in a qualified opinion (i.e. subsidiary in a foreign country that you can't audit because of circumstances). A client-imposed scope limitation would most likely result in a disclaimer (i.e. client won't ALLOW you access to records you need). So basically, if the auditor says they can't do something, it's qualified. If the client says you can't do something, it's a disclaimer. Hope that helps.

[oneFREAKINGpoint]

Yes, that does help a bit. Thanks for the clarification. 🙂

[Tina82]

My 3 cents on it. Scope limitation related opinions can be qualified or disclaimer depending on how material they are to the financial statements as a whole. Withdrawal is a disassociation from the engagement.

So you might end up with a qualified or disclaimer depending on whether the subsidiary is significant part of the company's operations; from the practice questions I've seen they usually say “significant” so a disclaimer would be more appropriate (scope limitation = no evidence for this significant item = disclaim).

Withdrawal is when you discover fraudulent/misleading/etc. fs and management doesn't correct

Hope this helps and please let me know if you find other clarifications on this.

R - 74;88
A - 84
B - 74;89
F - no study = 67; May 15 = 87 & done

[Author]

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