What is a Limited Audit? (Definition, Procedure & More)


Limited can be defined as an audit that is limited in scope as compared to the normal course of the audit scope. Limited Audits are mostly conducted as alternates to normal statutory audits (a general-purpose audit).

The main reason and rationale behind this limited engagement are to cover a limited ground, as compared to a full-fledged audit, which comprises an end-to-end examination.


As far as Limited Audit is concerned, it can be seen that it is mostly confined to certain accounts or operations. It is mostly carried out over a time duration of lesser than one year. It is mainly restricted to a specific purpose, which needs undivided, and urgent attention, per se.

This can also include one-off events across the year, like tax audits. Additionally, a limited audit mostly has a restricted scope, as compared to a full audit.

In this regard, the audit team is expected to design restricted protocols as compared to full audits. In this type of audit, the audit team is able to confine its operations to specific audit procedures.

In this regard, they are able to examine the specified functional areas of the organization, especially in the cases which need to be focused upon, in order to investigate that particular area, for better-related outcomes.

In this regard, it is also rudimentary to ensure that the auditors are mostly not able to produce a clean audit opinion, where they have engaged in a limited-scope audit.

Need for Limited Audit

Limited Audit mainly takes place because of a number of reasons. Firstly, it is mainly because of the fact that it is mostly confined to certain accounts or operations. Secondly, it is restricted to a specific audit.

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This is because that specific aspect or area needs attention more urgently as compared to other departments or functions. For example, a tax audit can be conducted in order to get a proper investigation of tax audits.

The procedure of the Limited Audit

The Limited Audit Process is undertaken, after which the report is duly sent to the members of the general meeting.

In this case, the procedure includes an interview with the management, which also inculcates verification of details, as well as an analytical audit.

The primary difference between a full scope and a limited scope can be defined as the fact that the limited scope audit does not have an underlying need to conduct substantive testing of different components.

For example, in the case of investments, auditors are not always supposed to design substantive procedures, which means that they do not need to include year-end market value, interest, and dividends in addition to a realized and unrealized gain of investments.

Alternatively, auditors, in the case of a limited-scope audit can obtain clarification from the bank or insurance company when it comes to obtaining certification from either a bank or the insurance company.

In this regard, it can be seen the bank or the insurance company is therefore responsible to take charge of the completeness and accuracy of the transactions that are provided in the investment data, which certifies completeness or accuracy.

Once the acceptable certification has been obtained from the party, the auditor would be able to limit their procedures by comparing the certified data to the amounts that are presented in the financial statements.

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Additionally, it can be seen that in addition to the audit procedures that are performed on investment in the underlying full scope audit, limited audit and full scope audit are conducted using the same features, more or less.

As a matter of fact, it can be seen that these procedures mainly relate to other operational aspects of the audit plan, further including testing of participant records, which include allocation of contributions and earnings to individual participant accounts, employee and employer contributions, as well as benefit payments, and an evaluation of internal controls over financial reporting.

A limited-scope audit in this regard primarily focuses on the compliance aspect of these areas, which mainly include the plan’s holistic compliance with the law.


Therefore, it can be seen that a Limited Scope Audit can be defined as a partial audit that is conducted in order to get proper clarity about specific aspects within the department itself. In the case of a limited audit, the procedures are not as stringently designed as in the case of a full audit.

This is essential because of the reason that limited audit is conducted on the basis of reconciling, and checking that the given departments do not have any misstated transactions.