When dealing with materiality and scope limitation conditions,
A) a disclaimer of opinion must be issued.
B) it is easier to evaluate the materiality of potential misstatements resulting from a scope limitation than for failure to follow GAAP.
C) scope limitations imposed by the client are always considered material.
D) an unqualified opinion may still be issued depending on the materiality of the scope limitation.

Question

Quizplus · Accepted Answer

An unqualified opinion may still be issued depending on the materiality of the scope limitation. The auditor should evaluate the materiality of the potential misstatements resulting from the scope limitation and consider whether it is pervasive or not. If the auditor concludes that the effects of the limitation are sufficiently immaterial and not pervasive, then an unqualified opinion may be issued with an explanatory paragraph about the nature of the scope limitation. However, if the auditor concludes that the effects of the limitation are material and pervasive, then a disclaimer of opinion should be issued. It is not necessarily easier to evaluate the materiality of potential misstatements resulting from a scope limitation compared to a failure to follow GAAP, and scope limitations imposed by the client are not always considered material.

When Dealing with Materiality and Scope Limitation Conditions