Question

The most common case in which conditions beyond the client's and auditor's control cause a scope restriction in an engagement is when the?

1) auditor is not appointed until after the client's year-end.
2) client won't allow the auditor to confirm receivables for fear of offending its customers.
3) auditor doesn't have enough staff to satisfactorily audit all of the client's foreign subsidiaries.
4) client is going through Chapter 11 bankruptcy.

Answer 1

The most common case in which conditions beyond the client's and auditor's control cause a scope restriction is when the client won't allow the auditor to confirm receivables for fear of offending its customers.

Step-by-step explanation:

The most common case in which conditions beyond the client's and auditor's control cause a scope restriction in an engagement is when the client won't allow the auditor to confirm receivables for fear of offending its customers.

This is because confirming receivables is a common auditing procedure that involves contacting customers to verify the amounts owed to the client. If the client refuses to allow the auditor to perform this procedure, it restricts the scope of the engagement as the auditor cannot obtain sufficient appropriate audit evidence.

By not confirming receivables, the client may be hiding potential discrepancies or irregularities in its accounts receivable, which could affect the accuracy of the financial statements.