An auditor is performing an audit of a nonissuer. The auditor is unable to obtain the audited financial statements of a significant equity method investee. The investment is material to the auditor's client. Which of the following is the MOST likely effect on the auditor's report?

Answer options:

Unmodified opinion.

Qualified opinion or disclaimer of opinion due to a scope limitation.

Qualified or adverse opinion due to a GAAP departure.

Unmodified opinion with an emphasis-of-matter paragraph.

How to approach this question

Can't get the data = Scope Limitation. Scope Limitation = Qualified (if material) or Disclaimer (if pervasive).

Full Answer

B.Qualified opinion or disclaimer of opinion due to a scope limitation.✓ Correct

The inability to obtain sufficient appropriate audit evidence regarding an investment accounted for by the equity method (e.g., audited financials of the investee) constitutes a scope limitation. Depending on materiality/pervasiveness, the auditor issues a qualified opinion or disclaimer.

Common mistakes

Confusing Scope Limitation (Can't check) with GAAP Departure (Wrong number).

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