As a result of management's refusal to permit the auditor to physically examine inventory. The auditor must depart from the unqualified 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

When management restricts the scope of an audit, either by not providing sufficient evidence or preventing the auditor from accessing certain information, the auditor must issue a modified audit report indicating that the scope was limited. In this case, the auditor's inability to physically examine inventory means that the scope of the audit has been restricted. Therefore, the best choice is D, which indicates that the scope of the audit has been restricted.

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