B. The omission of the statement of cash flows.
C. A material departure from generally accepted accounting principles.
D. Management's refusal to furnish written representations.

Answer(s): D
Explanation:
Choice "d" is correct. Management's refusal to furnish written representations is a significant
client imposed restriction on the scope of an audit, ordinarily warranting a disclaimer of opinion.
Choice "a" is incorrect. Inadequate disclosure would result in a qualified or adverse opinion.
Choice "b" is incorrect. A qualified report would be appropriate when a "statement of cash flows"
is omitted and the scope of the audit is not restricted.
Choice "c" is incorrect. A departure from GAAP would result in either a qualified or adverse
opinion, depending on materiality.
QUESTION: 139
When an auditor qualifies an opinion because of the inability to confirm accounts receivable by
direct communication with debtors, the wording of the opinion paragraph of the auditor's report
should indicate that the qualification pertains to the:

A. Limitation on the auditor's scope.
B. Possible effects on the financial statements.
C. Lack of sufficient appropriate audit evidence.
D. Departure from generally accepted auditing standards.

Answer(s): B
Explanation:
Choice "b" is correct. When an auditor qualifies his or her opinion because of a scope limitation,
such as the inability to confirm A/R, the wording in the opinion paragraph should indicate that
the qualification pertains to the possible effects on the FS and not to the scope limitation itself.
The opinion paragraph should not refer to the scope limitation itself, the lack of evidence, or the
departure from GAAS.
Choices "a", "c", and "d" are incorrect, based on the above Explanation.
QUESTION: 140
The adverse effects of events causing an auditor to believe there is substantial doubt about an
entity's ability to continue as a going concern would most likely be mitigated by evidence
relating to the:

A. Ability to expand operations into new product lines in the future.
B. Feasibility of plans to purchase leased equipment at less than market value.
C. Marketability of assets that management plans to sell.
D. Committed arrangements to convert preferred stock to long-term debt.

Answer(s): C
Explanation:
Choice "c" is correct. The adverse effects of events causing an auditor to believe there is a
substantial doubt about an entity's ability to continue as a going concern would most likely be
mitigated by evidence relating to the marketability of assets that management plans to sell. By
providing evidence that there is a ready market for assets that could be converted to cash,

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