[Morganf]

see below

BEC - 88
AUD - 69, 74, 93
FAR - 78
REG - 79

[Morganf]

Can anyone explain why the answer here is B, not A? (question taken from a test bank, not an exam disclosure)

Which auditor actions are possible when that auditor incurs a scope limitation relating to a public company engagement on whether a previously reported material weakness continues to exist?

A – Disclaimer or Qualified Opinion

B – Disclaimer only

My understanding of report modificaitons:

Unqualified with Explanatory Paragraph:

Inconsistent GAAP*

Going Concern*

Justified GAAP departure

Emphasis of a matter

Another Audiitor**

*explanatory paragraph must go after opinion

**shared report with all paragraphs modified, not actually an explanatory paragraph added

Inadequate Disclosures —- Qualified / Adverse

Unjustified GAAP departure- — Qualified / Adverse

Going Concern —- Unqualified / Disclaimer

Scope Limitation —- Qualified / Disclaimer

Independance —- Disclaimer only

BEC - 88
AUD - 69, 74, 93
FAR - 78
REG - 79

[jenuno01]

Class of 2012

[jenuno01]

Would it be because they did not audit the previous year?, unaudited FS results in a Disclaimer of opinion…that would be my guess

Class of 2012

[yankeeaccountant]

@Morgan,

Confusing…. Since they are referencing material weakness, it relates to the internal control effectiveness. So, the choices would be qualified opinion or disclaimer of opinion when a scope limitation exists. I guess the question is inferring that since the material weakness still exists shows that it is significant as a scope limitation which is why it would be a disclaimer. Normally, I would have chosen A, but I guess the continued existence makes it significant? Well, that is my best guess.

That was a tricky one……what testbank is that from?

[Minimorty]

When I hear “publicly traded” and “scope limitation,” I immediately think Disclaim only. Any time you cannot or are not permitted by management to complete all necessary due diligence an control testing, I don't see how you could issue an opinion. Perhaps any of the more experienced auditors on the site can provide a little more on this.

[Morganf]

Thank you for the responses.

The question is IC-0152 from the Wiley Online Test Bank. I found the answer from just googling it:

“The auditor may issue an opinion on whether a previously reported

material weakness continues to exist only when there have been no restrictions

28on the scope of the auditor's work. Because of the scope of an engagement to

report on whether a previously reported material weakness continues to exist,

any limitations on the scope of the auditor's work require the auditor either to

disclaim an opinion or to withdraw from the engagement. A qualified opinion is

not permitted. ” ~PCAOB Auditing Standard No.4

BEC - 88
AUD - 69, 74, 93
FAR - 78
REG - 79

[Author]

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