Notes on Audit Scope Limitations and Qualified Opinions

Instances affecting accounting records include:
Loss, destruction, or indefinite seizure by authorities.
Timing and Nature of Auditor’s Work:
Auditors may be appointed after client’s balance sheet date.
This can hinder evidence collection on opening inventory due to:
- Cutoff procedures may not be feasible.
- Physical examination of inventory may be limited.

CAS 705 (Par. 11-13): Highlights the escalated actions auditors should take in response to a client-imposed scope limitation.
Important procedures are not possible, contributing to the risk associated with obtaining evidence.
Qualified Opinion:
When evidence concerning completeness of revenues (e.g., donations for non-profits) is lacking, auditors issue a qualified opinion.
Example:
- Great Cause Charity Foundation illustrates a situation where revenue verification was limited.

Qualified Opinion:
The report retains the unmodified opening paragraph.
Basis for Qualified Opinion:
Revenue from fundraising activities isn’t verifiable.
Verification limited to amounts recorded in financial records.
As a result, auditors couldn't determine necessary adjustments for:
- Revenues
- Excess of revenue over expenses in statements
- Current and net assets in financial position statements.

Qualified Opinion Summary:
"Except for possible effects of matters in the Basis for Qualified Opinion, the financial statements present fairly the financial position of Great Cause Foundation as at August 31, 2024."
Adherence to Canadian accounting standards for not-for-profit organizations is noted in the conclusion.