Final answer:
When faced with a scope restriction on an ICFR engagement, the auditor may withdraw from the engagement or disclaim an opinion, as these restrictions may prevent obtaining sufficient evidence to support an opinion on the entity's internal controls.
Step-by-step explanation:
When there is a restriction on the scope of the internal control over financial reporting (ICFR) engagement, the auditor should take specific steps to address the situation. According to auditing standards, if a scope limitation is imposed by the client or circumstances that are beyond the auditor's control, the auditor has two options:
- The auditor may withdraw from the engagement if the limitation on scope is client-imposed and the auditor believes the limitation will preclude the auditor from obtaining the reasonable assurance necessary to support an opinion on the entity's internal controls.
- Alternatively, the auditor may disclaim an opinion on the effectiveness of internal control over financial reporting if the limitation prevents the auditor from obtaining sufficient appropriate audit evidence.
Issuing an adverse opinion is generally related to finding a material weakness in the ICFR, not to scope limitations. Depending on an another audit firm's work or reporting directly to the Treadway Commission are not appropriate actions in the case of a scope limitation.