Restrictions imposed by an entity prohibited the observation of physical inventories, which accounted for 35 percent of total assets. Alternative auditing procedures were not feasible, although the auditors were able to examine satisfactory evidence for all other items in the financial statements. The auditors would most likely express
A)a qualified opinion on the entity's financial statements, referring to a departure from generally accepted accounting principles.
B)a disclaimer of opinion on the entity's financial statements.
C)an unmodified opinion on the entity's financial statements with an other-matter paragraph.
D)an unmodified opinion on the entity's financial statements with a modification of the Auditor's Responsibilities for the Audit of the Financial Statements Section.

Question

Quizplus · Accepted Answer

The inability to observe physical inventories and the lack of feasible alternative auditing procedures represent a scope limitation that is significant enough to render the auditors unable to obtain sufficient evidence to support their opinion on the financial statements. Therefore, a disclaimer of opinion is appropriate in this scenario.

Restrictions Imposed by an Entity Prohibited the Observation of Physical