In short
A disclaimer of opinion means the auditor does not express an opinion, because it could not obtain sufficient appropriate evidence and the possible effects of undetected misstatements could be both material and pervasive.
Key takeaways
- Typical causes are severe scope limitations, such as management refusing to provide written representations.
- If the limitation's effects are material but not pervasive, the opinion is qualified instead.
- The auditor may also withdraw from the engagement where possible.
Where it's tested
AUD: Audit Reports — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An auditor is unable to observe the physical inventory count or satisfy themselves through alternative procedures, and inventory represents 60% of total assets. What opinion is appropriate?