Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

When may an auditor issue a qualified opinion?

1. Lack of sufficient appropriate audit evidence.

2. Restrictions of the scope of the audit.

3. Both situations are valid.

4. Neither situation is valid.

The correct answer is: Lack of sufficient appropriate audit evidence.

A qualified opinion is issued by an auditor when there are certain limitations in the audit that prevent them from obtaining sufficient appropriate audit evidence, or when the evidence that they have obtained suggests that the financial statements may not be free of material misstatement, but the misstatement is not pervasive. In the context of this question, the term "lack of sufficient appropriate audit evidence" signifies that the auditor was unable to gather enough adequate data to form a definitive conclusion about the financial statements. If an auditor encounters a situation where evidence is lacking, and this lack is significant enough to warrant concern but does not pervade the overall financial statements, a qualified opinion is appropriate. This sends a clear message to users of the financial statements that while the information is mostly reliable, there are some limitations or uncertainties that must be considered. Additionally, when considering restrictions on the scope of the audit, this scenario often leads to a similar conclusion where the auditor may decide to issue a qualified opinion if the scope limitation is significant but not pervasive. Logically, both lack of evidence and scope restrictions can lead to a qualified opinion, but the key is the materiality and pervasiveness of these issues. In summary, a qualified opinion can arise from a lack of sufficient appropriate audit evidence or