An auditor was unable to obtain an audited financial report or other evidence supporting an entity's investment in a foreign subsidiary considered material to the financial report. Between which of the following opinions
Should the entity's auditor choose?
A) Qualified and disclaimer.
B) Qualified and adverse.
C) Disclaimer and unmodified with an Emphasis of Matter.
D) Adverse and unmodified with an Emphasis of Matter.

Question

Quizplus · Accepted Answer

A qualified opinion is appropriate when there is a limitation on the scope of the audit, which is the case here due to the inability to obtain appropriate evidence. A disclaimer of opinion is appropriate when there is a significant limitation on the scope of the audit that prevents the auditor from forming an opinion. In this case, the inability to obtain evidence regarding a material investment in a foreign subsidiary is a significant limitation on the scope of the audit, hence a disclaimer of opinion is also necessary. Therefore, the best choice is A) Qualified and disclaimer.

An Auditor Was Unable to Obtain an Audited Financial Report