Limitations of audit are:

• Sometimes the judgement to choose the auditing standard and procedures becimes inevitable wherein a wrong judgement may be taken that would result in overlooking any point or statement that would have been crucial ro be viewed and results in misstatements.
• The sample ng techniques which are used to run various tests, select a portion of population that represents the whole population. But it may happen at times, that the selected samples are not the actual representative of the entire population.
• Risk is a factor that can be reduced but not eliminated in audits. And if one is not very experienced,then he or she may be prone to risk which would futher create misstatements and thus wrong financial reporting.
• Time is also a limitation. As these auditors are given a specified timing for an audit to be completed and presented to the clients. Before this tomez the audit just be completed. One auditor who is experienced enough can cope with this limitation properly.
• Independence threaten is also a big limitation. Many times, auditors are not made to work independently and are forced to do a particular task. This would lead to misconducts in the working because of which the auditors could not perform well.

Refer to the audit reports in Illustrations 1.6, 1.7, and 1.9 below. What are some key terms and phrases included in the reports that address these limitations?

ILLUSTRATION 1.6 Example of an unmodified audit report on the financial statements of McLellans Shoes, a private company [1] Independent Auditors Report [2] To the owners of McLellans Shoes: [3] Report on the Financial Statements We have audited the accompanying financial statements of McLellans Shoes, which comprise the balance sheets as of December 31, 2022 and 2021, and the related statements of income, changes in equity, and cash flows for the years then ended, and the related notes to the financial statements. [4] Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. [5] Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. [6] Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of McLellans Shoes as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. [7] Bell & Bowerman, LLP Seattle, Washington [8] February 15, 2023 Source: AU-C 700.A63 ExhibitIllustration 1.

ILLUSTRATION 1.7 Example of an unqualified audit report on the financial statements of The Boeing Company, a public company [1] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM [2] To the shareholders and the Board of Directors of The Boeing Company Opinion on the Financial Statements [3] We have audited the accompanying consolidated statements of financial position of The Boeing Company and subsidiaries (the Company) as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America. [4] We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Companys internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 12, 2018, expressed an unqualified opinion on the Companys internal control over financial reporting. Basis for Opinion [5] These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. [6] We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. [7] /s/ Deloitte & Touche LLP Chicago, Illinois [8] February 12, 2018 [9] We have served as the Companys auditor since at least 1934; however, an earlier year cannot be reliably determined.

ILLUSTRATION 1.9 Example of an unqualified audit report on the effectiveness of ICFR for The Boeing Company, a public company [1] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM [2] To the Shareholders and Board of Directors of The Boeing Company [3] Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of The Boeing Company and subsidiaries (the Company) as of December 31, 2017, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control Integrated Framework (2013) issued by COSO. [4] We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017, of the Company and our report dated February 12, 2018, expressed an unqualified opinion on those financial statements. [5] Basis for Opinion The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. [6] We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. [7] Definition and Limitations of Internal Control over Financial Reporting A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. [8] /s/Deloitte & Touche LLP Chicago, Illinois [9] February 12, 2018