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

What circumstance might lead an auditor to issue a qualified opinion instead of a disclaimer?

1. Inability to obtain adequate audit documentation.

2. Management's refusal to sign confirmations.

3. Unjustified departures from accounting principles.

4. Limitations on the scope of the audit.

The correct answer is: Unjustified departures from accounting principles.

A qualified opinion is appropriate when an auditor encounters specific issues that lead to a situation where the financial statements are fairly presented in all material respects, except for certain identified misstatements. In the context of unjustified departures from accounting principles, the auditor believes that while the financial statements are mostly accurate and reliable, there are specific instances where management has not adhered to generally accepted accounting principles (GAAP) without a valid justification. When these departures are significant enough to affect the financial statements, but not pervasive enough to render the entire financial reporting unreliable, a qualified opinion is warranted. This indicates to users of the financial statements that while the majority of the information is reliable, there are particular areas where the presentation does not comply with the recognized accounting standards. In contrast, a disclaimer of opinion typically occurs when an auditor is unable to gather sufficient, appropriate audit evidence to form an opinion on the financial statements. This could involve situations such as more pervasive limitations on the scope of the audit, or an inability to obtain adequate documentation. A disclaimer signals that the auditor cannot express an opinion due to severe limitations or uncertainty, rather than specific inaccuracies in the statements themselves.