QUESTION: 44
An auditor decides to issue a qualified opinion on an entity's financial statements because a
major inadequacy in its computerized accounting records prevents the auditor from applying
necessary procedures. The opinion paragraph of the auditor's report should state that the
qualification pertains to:

A. A client-imposed scope limitation.
B. A departure from generally accepted auditing standards.
C. The possible effects on the financial statements.
D. Inadequate disclosure of necessary information.

Answer(s): C
Explanation:
Choice "c" is correct. When an auditor qualifies his opinion because of a scope limitation, the
wording in the opinion paragraph should indicate that the qualification pertains to the possible
effects on the financial statements and not to the scope limitation itself.
Choice "a" is incorrect. When an auditor qualifies his opinion because of a scope limitation, the
wording in the opinion paragraph should indicate that the qualification pertains to the possible
effects on the financial statements and not to the scope limitation itself.
Choice "b" is incorrect. A scope limitation is a departure from generally accepted auditing
standards. However, when an auditor qualifies his opinion because of a scope limitation, the
wording in the opinion paragraph should indicate that the qualification pertains to the possible
effects on the financial statements and not to the scope limitation itself.
Choice "d" is incorrect. Inadequate disclosure of necessary information is a departure from
GAAP, rather than a scope limitation.
QUESTION: 45
When an auditor qualifies an opinion because of inadequate disclosure, the auditor should
describe the nature of the omission in a separate explanatory paragraph and modify the:
A. Option A
B. Option B
C. Option C
D. Option D

Answer(s): D
Explanation:
Choice "d" is correct. In a report qualified for inadequate disclosure, the auditor would add an
explanatory paragraph and modify the opinion paragraph, but the introductory and scope
paragraphs would not be modified.
Choices "a", "b", and "c" are incorrect, as per the above Explanation.
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