Question

Which of the following scenarios does not result in a qualified opinion?

1) A scope limitation prevents the auditor from completing an important audit procedure.
2) Circumstances exist that prevent the auditor from conducting a complete audit.
3) The auditor lacks independence with respect to the audited entity.
4) An accounting principle at variance with GAAP is used.

Answer 1

The scenario that does not result in a qualified opinion is when the auditor lacks independence with respect to the audited entity. This typically leads to a disclaimer of opinion or an adverse opinion, not a qualified one.

Step-by-step explanation:

A student asked about the scenario that does not result in a qualified opinion by an auditor. To answer the question, it's important to understand what a qualified opinion means.

An auditor gives a qualified opinion when there are specific reasons to believe that the financial statements of a company are generally accurate but there is a scope limitation or an instance where an accounting principle is not consistently applied in line with Generally Accepted Accounting Principles (GAAP).

In the scenarios provided:

1. A scope limitation prevents the auditor from completing an important audit procedure.
   
2. Circumstances exist that prevent the auditor from conducting a complete audit.
   
3. The auditor lacks independence with respect to the audited entity. This is the scenario that does not result in a qualified opinion. Instead, a lack of auditor independence usually leads to a disclaimer of opinion or possibly an adverse opinion, depending on the circumstances.
   
4. An accounting principle at variance with GAAP is used.

Therefore, the correct answer to this question is scenario 3, where the auditor lacks independence from the entity being audited.