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

If an audit report includes a scope limitation, how should it address that limitation?

1. In the opinion paragraph only

2. In a separate paragraph

3. It does not need to be mentioned

4. In the introduction paragraph

The correct answer is: In a separate paragraph

When an audit report includes a scope limitation, it is essential to address that limitation in a separate paragraph. This approach provides clarity to the readers of the report by prominently highlighting the nature and impact of the scope limitation on the audit. Including a separate paragraph allows the auditor to clearly outline the reasons for the limitation, its effects on the audit, and any mitigating factors. This transparency is crucial for stakeholders who rely on the audit report to understand the completeness and reliability of the financial statements presented. By effectively communicating the scope limitation, the auditor ensures that the users of the report are fully informed, adding credibility to the audit process. This handling contrasts with mentioning the limitation only in the opinion paragraph, which could lead to insufficient emphasis on the issue, potentially leading to misunderstandings about the audit's thoroughness. Thus, using a distinct paragraph serves to enhance communication and transparency in the audit report.