CA Inter P5 · Chapter 1 · Question 3 of 10
Mr. Kunal, a trainee, lists the following as inherent limitations of an audit. Which one is NOT an inherent limitation recognised by SA 200?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) The auditor lacks the competence required to apply the Standards on Auditing
Explanation
SA 200 identifies inherent limitations arising from the nature of financial reporting (judgement and estimates), the nature of audit procedures (no legal powers of search, collusion, forgery) and the need for timeliness and cost balance. Lack of competence is not an inherent limitation; the auditor is expected to be competent, and accepting an engagement without competence would breach ethical requirements.
More Nature, Objective and Scope of Audit MCQs
- Q5Professional skepticism, as required by SA 200, includes:
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