Auditor Limitation on Scope of Audit

Is refusal by an entity's attorney to furnish information in a legal letter a limitation on the scope of the audit?

Final answer:

Yes, an attorney's refusal to furnish information in a legal letter is a limitation on the scope of an audit, but it does not necessarily preclude an unqualified opinion.

Answer:

Yes, an attorney's refusal to furnish information in a legal letter is a limitation on the scope of an audit, but it does not necessarily preclude an unqualified opinion. The auditor may seek the necessary information from other sources.

During an audit, the refusal by an entity's attorney to provide information in a legal letter can indeed limit the scope of the audit. This limitation arises from the fact that the auditor may not have access to all the relevant information needed to form an opinion on the financial statements.

While this limitation does not automatically mean that the auditor cannot issue an unqualified opinion, it does raise concerns about the completeness of the audit. In such cases, the auditor may need to explore other avenues to gather the necessary information to support their opinion.

It is essential for auditors to address such limitations carefully and ensure that they have obtained sufficient appropriate audit evidence to support their opinion. Failure to do so could result in a qualified opinion or a disclaimer of opinion, which indicates that the auditor was unable to form an opinion on the financial statements due to the limitations on the audit scope.

Auditors should always strive to overcome any limitations on the scope of their audit to provide stakeholders with a reliable assessment of the entity's financial position and performance.