Management of Megadile,Inc.refuses to sign the management representation letter given to them in the course of the audit on the grounds that it invades the company's privacy.Such actions will be considered by the auditors to be
A)a violation of full and fair disclosure.
B)securities law violation.
C)a scope limitation.
D)a breakdown in internal controls.

Question

Quizplus · Accepted Answer

The refusal to sign the management representation letter by Megadile, Inc. results in a scope limitation. A scope limitation is a situation where the auditor is unable to obtain sufficient appropriate audit evidence due to the managers' refusal to allow the auditor access to certain records or information. This may result in a disclaimer of opinion or qualification of the auditor's report. It is not a violation of full and fair disclosure, securities law violation, or a breakdown in internal controls.