Which scenario results in a Disclaimer of Opinion?

Which scenario results in a Disclaimer of Opinion?

• A. Misstatements are material and pervasive.
• B. Misstatements are immaterial.
• C. The auditor cannot obtain sufficient evidence or complete testing.
• D. All information is fully supported.

Answer: (C)

Disclaimers arise when the auditor cannot obtain sufficient appropriate audit evidence to form an opinion, usually because of a scope limitation that prevents completing procedures. In this scenario, not being able to obtain enough evidence or complete testing means there isn’t a solid basis to judge whether the financial statements are fairly presented, so the auditor must issue a disclaimer rather than try to express an opinion. If misstatements are material and pervasive, the appropriate result would be an adverse opinion (or a qualified opinion if the pervasiveness is not that wide), not a disclaimer. If misstatements are immaterial, or if all information is fully supported, the audit would typically result in a clean, unqualified opinion.

Disclaimers arise when the auditor cannot obtain sufficient appropriate audit evidence to form an opinion, usually because of a scope limitation that prevents completing procedures. In this scenario, not being able to obtain enough evidence or complete testing means there isn’t a solid basis to judge whether the financial statements are fairly presented, so the auditor must issue a disclaimer rather than try to express an opinion.

If misstatements are material and pervasive, the appropriate result would be an adverse opinion (or a qualified opinion if the pervasiveness is not that wide), not a disclaimer. If misstatements are immaterial, or if all information is fully supported, the audit would typically result in a clean, unqualified opinion.