AICPA Exam CPA-Auditing Topic 2 Question 103 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 103
Topic #: 2

A limitation on the scope of an auditor's examination sufficient to preclude an unqualified opinion will always result when management:

AEngages the auditor after the year-end physical inventory count is completed.

BFails to correct a material internal control weakness that had been identified during the prior year's audit.

CRefuses to furnish a management representation letter to the auditor.

DPrevents the auditor from reviewing the audit documentation of the predecessor auditor.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. Management's refusal to furnish a written representation letter constitutes a limitation on the scope sufficient to preclude an unqualified opinion.

Choice 'a' is incorrect. Engaging the auditor after the year-end physical count is completed need not preclude an unqualified opinion if the auditor can apply satisfactory alternative audit procedures.

Choice 'b' is incorrect. Failure to correct a material internal accounting control weakness that had been identified during the prior year's audit need not preclude an unqualified opinion, although it may require the auditor to apply extended auditing procedures.

Choice 'd' is incorrect. Inability to review the predecessor's prior year audit documentation may cause the successor auditor more work but need not preclude an unqualified opinion in the current year.

by Edgar at Nov 15, 2024, 11:40 AM

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14 days ago

Definitely C. Without a management representation letter, the auditor can't rely on the accuracy of the financial statements. That's a deal-breaker for an unqualified opinion.

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