Question 4:


Which of the following provides the highest level of assurance?  

A. Limited assurance engagement

B. Review 

C. Compilation 

D. Audit 

E. Investigations  


The correct answer is (D)


Past Question Review:

Assurance  is  a  strong feeling  or  confidence  about  being  right.  
 
In an assurance engagement,  a  firm  is  engaged to  express  opinion on the  financial statements  that have been prepared by  the  directors.  The  opinion is  an expression of  assurance  about  the financial  statements  that  has  been  reviewed. 
   
It  gives  assurance  to  the  company  owners that  the financial  statements  can  be relied  upon. 

Assurance  can be  provided by: 

  • audit:  this  may  be  external  audit, internal  or  a  combination of  the  two. 
  • review:   this  is  a  voluntary  investigation, the  resulting  opinion is  usually  expressed in a  form  of  negative  assurance. 

Without  assurance  from  the  professional  accountants, the  shareholders  may  not  accept that the  financial statements  as  giving  a  true  and  fair  view.   The  statutory  audit provides assurance  as  to  the  quality  of  the  information  displayed  in  the  financial statements. 

The  higher  level  of  assurance  provided by  the  audit  report  will  raise  the  credibility provided by  the  assurance  process.   But  the  audit  work is  likely  to  take  more  time  than  a review  and  will  thus  cost  more  than the  review. 

The correct answer is (D)

Read other posts for more questions solved and don't forget to share your thoughts in comments below