Limitation of audit scope
Where there has been a limitation on the scope of the auditor’s work that prevents him from obtaining sufficient evidence to express an unqualified opinion:
(a) the auditor’s report should include a description of the factors leading to the limitation
on the scope.
(b) the auditor should issue a disclaimer of opinion when the possible effect of a limitation on scope is so material or pervasive that they are unable to express an opinion on the financial statements.
(c) a qualified opinion should be issued when the effect of the limitation is not so material
or pervasive as to require a disclaimer and the wording of the opinion should indicate that it is qualified as to the possible adjustments to the financial statements that might have been determined to be necessary had the limitation not existed.
A description of factors leading to a limitation enables the reader to understand the reasons for the limitation.
(iv) Disagreement on an accounting treatment or disclosure
Where the auditor disagrees with the accounting treatment or disclosure of a matter in the financial statements and in the auditor’s opinion the effect of that disagreement is material to the financial statements, the auditor should include in the opinion section of his report, a description of all substantive factors giving rise to the disagreement and their implications for the financial statements.
When the auditor concludes that the effect of the matter giving rise to disagreement is so material or pervasive that the financial statements are seriously misleading, they should issue an adverse opinion.
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