The refusal of a client's attorney to provide a representation on the legality of a particular act committed by the client is generally
A) Sufficient reason to issue a "subject to" qualified opinion.
B) Considered to be a scope limitation.
C) Insufficient reason to modify the auditor's report because of the attorney's obligation of confidentiality.
D) Proper grounds to withdraw from the engagement without further consideration.

Question

Quizplus · Accepted Answer

When the client's attorney refuses to provide a representation on the legality of a particular act committed by the client, it results in a scope limitation for the auditor. The auditor is unable to obtain sufficient evidence to form an opinion on the legality of the act in question. Hence, the auditor will note this limitation in their report. Therefore, option B is the correct answer. Option A is incorrect since a "subject to" qualified opinion is used when there is a departure from GAAP. Option C is incorrect as the auditor cannot rely on the attorney's obligation of confidentiality to modify the auditor's report. Finally, option D is incorrect as the auditor must only withdraw from the engagement when there is a significant ethical conflict or an insurmountable scope limitation.

The Refusal of a Client's Attorney to Provide a Representation