As a result of management's refusal to permit the auditor to physically examine inventory, the auditor must depart from the unmodified opinion audit report because
A) the financial statements have not been prepared in accordance with GAAP.
B) the scope of the audit has been restricted by circumstances beyond either the client's or auditor's control.
C) the financial statements have not been audited in accordance with GAAS.
D) the scope of the audit has been restricted.

Question

Quizplus · Accepted Answer

The inability to physically examine inventory due to management's refusal constitutes a scope limitation imposed by the client, which prevents the auditor from completing the audit in accordance with Generally Accepted Auditing Standards (GAAS). This situation leads to a modification of the auditor's report because the auditor cannot obtain sufficient appropriate audit evidence about certain aspects of the financial statements.

As a Result of Management's Refusal to Permit the Auditor