As a result of management's refusal to permit the auditor to physically examine inventory,the auditor has not accumulated sufficient evidence to conclude whether financial statements are stated in accordance with ASPE (Accounting Standards for Private Enterprises).The auditor must depart from the unmodified audit report because
A)the financial statements have not been prepared in accordance with GAAP.
B)the scope of the audit has been restricted by circumstances beyond either the client's or auditor's control.
C)the auditor has lost independence.
D)the scope of the audit has been restricted by the client.

Question

Quizplus · Accepted Answer

When an auditor is unable to accumulate sufficient evidence due to a limitation imposed by the client, such as management's refusal to allow physical examination of inventory, it is considered a scope limitation. This prevents the auditor from completing the audit as planned and may lead to a modification of the audit report. The issue here is not about the preparation of financial statements in accordance with GAAP, the auditor's independence, or restrictions beyond control, but specifically about a client-imposed limitation.

As a Result of Management's Refusal to Permit the Auditor