Document ID: chunk:federal_register_of_legislation:F2022C01208:reg:14:p27
Version: federal_register_of_legislation:F2022C01208
Segment Type: reg
Provision Reference: reg 14 (pt 27/57)
Character Range: 84344–87204

Appendix 4.

Limitation on Scope (Ref: Para. 42)

A47.         Ordinarily, a limitation on scope prevents the auditor from completing the review.

Limitation on Scope Imposed by Management

A48.         The auditor needs to refuse to accept an engagement to review a financial report if the auditor's preliminary knowledge of the engagement circumstances indicates that the auditor would be unable to complete the review because there will be a limitation on the scope of the auditor's review imposed by management of the entity.  (Ref: Para. 43)

A49.         If, after accepting the engagement, management imposes a limitation on the scope of the review,  the auditor needs to request the removal of that limitation. If management refuses to do so, the auditor is unable to complete the review and express a conclusion. In such cases, the auditor needs to communicate, in writing, to the appropriate level of management and those charged with governance, the reason(s) why the review cannot be completed.  Nevertheless, if a matter comes to the auditor's attention that causes the auditor to believe that a material adjustment to the financial report is necessary for it to be prepared, in all material respects, in accordance with the applicable financial reporting framework, under paragraphs 27, 28 and 30, the auditor needs to communicate such matters to the appropriate level of management and, where appropriate, those charged with governance.  (Ref: Para. 44)

    A50.         The auditor needs to consider the legal and regulatory requirements, including whether there is a legal requirement for the auditor to issue a report. If there is such a requirement, the auditor needs to disclaim a conclusion and provide in the auditor's review report the reason why the review cannot be completed. However, if a matter comes to the auditor's attention that causes the auditor to believe that a material adjustment to the financial report is necessary for it to be prepared, in all material respects, in accordance with the applicable financial reporting framework the auditor needs to communicate such a matter in the report.  (Ref: Para. 45)

Other Limitations on Scope Not Imposed by Management (Ref: Para. 48)

A51.         A limitation on scope may occur due to circumstances other than a limitation on scope imposed by management or those charged with governance. In such circumstances, the auditor is ordinarily unable to complete the review and express a conclusion, and is guided by paragraphs 39 and 49.  There may be, however, some rare circumstances where the limitation on the scope of the auditor's work is clearly confined to one or more specific matters that, while material, are not in the auditor's judgement pervasive to the financial report.  In such circumstances,  the auditor needs to modify the auditor's review report by indicating