[AU-C 580] A limitation on the scope of the audit

■ Management’s refusal to furnish written representations constitutes a limitation on the scope of the audit.

○ The refusal is often sufficient to preclude an unmodified opinion.

○ This is according to AU-C 580, Written Representations.

 

■  Management’s refusal to furnish written representations  may cause an auditor to disclaim an opinion or withdraw from the engagement.

○ Especially with regard to representations about (1) fraud, (2) noncompliance, (3) uncorrected misstatements, (4) litigation and claims, (5) estimates, (6) related party transactions, and (7) subsequent events.

 

■ However, the circumstances may permit a qualified opinion.

 

■ Furthermore, the auditor should consider the effects of management’s refusal on his or her ability to rely on other management representations.

 

■Unwillingness to sign a management representation letter results in a scope limitation that requires a disclaimer.