Question

Scope limitations resulting in disclaimers under U.S. auditing standards affect the standard audit report through which of the following?

a. Modifying the introductory paragraph.
b. Eliminating the scope paragraph.
c. Adding an explanatory paragraph before the disclaimer paragraph.
d. Both B and C.
e. All of the above.

Answer 1

Scope limitations in an audit lead to the addition of an explanatory paragraph before the disclaimer paragraph in the audit report as per U.S. auditing standards. Other parts of the report like the scope paragraph are not necessarily eliminated, and the introductory paragraph remains unmodified.

Step-by-step explanation:

When there are scope limitations in an audit which lead to the issuance of a disclaimer, this affects the standard audit report in a specific manner according to U.S. auditing standards. The correct response to the question is option (c): Adding an explanatory paragraph before the disclaimer paragraph. This would involve providing additional information explaining the reason for the disclaimer and the implications on the audit. There would not necessarily be a modification to the introductory paragraph nor is the scope paragraph eliminated. The explanatory paragraph is intended to provide context to the reader of the financial statements and the audit report regarding the nature and impact of the scope limitation.