A disclaimer of opinion is generally issued when the auditor cannot obtain sufficient appropriate evidence and the possible effects are:
Correct answer: B. Material and pervasive
- A. Immaterial but frequent
- B. Material and pervasive
- C. Certain but favorable
- D. Limited to one trivial balance
Explanation
A disclaimer is used when a severe scope limitation prevents the auditor from forming an opinion and the possible effects are material and pervasive. A limited or immaterial issue normally does not justify refusing to express an opinion.
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Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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