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Answer :
Regarding the reporting alternatives available, the auditor is free to provide a different judgement about any financial statement component for which he has not gathered sufficient information to express a conviction about the accuracy and fairness of the financial statement.
Scope limitation in an audit refers to situations where the auditor is unable to obtain sufficient and appropriate audit evidence or carry out the required audit procedures. Scope limitations can arise due to various reasons, including the nature of the business, the complexity of the transactions, restrictions imposed by the client, or circumstances beyond the control of the auditor.
Client-imposed scope limitations occur when the client refuses to provide necessary information, prevents the auditor from accessing relevant documents or facilities, or does not permit the auditor to communicate with third parties. Circumstance-imposed scope limitations, on the other hand, occur due to events beyond the control of the client or the auditor, such as natural disasters, legal restrictions, or unexpected changes in circumstances.
When a scope limitation is encountered during an audit, the auditor must communicate the limitation to the client and, if necessary, obtain management's representation acknowledging the limitation. The auditor must also consider the potential impact of the limitation on the financial statements and the audit report.
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