Which scenario is explicitly cited as an example of a limitation on scope?

Which scenario is explicitly cited as an example of a limitation on scope?

• A. Auditor unable to obtain external confirmations.
• B. Management's decision to change accounting estimates.
• C. Company books and records destroyed in fire.
• D. Partial completion of testing due to time constraints.

Answer: (C)

A limitation on scope happens when the auditor cannot obtain enough appropriate audit evidence due to circumstances beyond their control. If company books and records are destroyed in a fire, the auditor loses the primary data trail needed to verify balances and transactions, making it impossible to obtain the evidence required for a reliable opinion. This is a clear, explicit example of a scope limitation because the necessary information simply isn’t available. The other scenarios don’t, on their own, demonstrate a clear, explicit scope limitation. Not obtaining external confirmations is an evidence-gathering issue that could be addressed with alternative procedures if possible. A change in accounting estimates is a management judgment, not a limitation on evidence. Partial completion of testing due to time constraints may reflect planning constraints, not an inherent impossibility to obtain evidence.

A limitation on scope happens when the auditor cannot obtain enough appropriate audit evidence due to circumstances beyond their control. If company books and records are destroyed in a fire, the auditor loses the primary data trail needed to verify balances and transactions, making it impossible to obtain the evidence required for a reliable opinion. This is a clear, explicit example of a scope limitation because the necessary information simply isn’t available.

The other scenarios don’t, on their own, demonstrate a clear, explicit scope limitation. Not obtaining external confirmations is an evidence-gathering issue that could be addressed with alternative procedures if possible. A change in accounting estimates is a management judgment, not a limitation on evidence. Partial completion of testing due to time constraints may reflect planning constraints, not an inherent impossibility to obtain evidence.