Question 6:
Which of the following confirmations describes a review of financial statements?
A. Limited assurance provided, Positive opinion expressed
B. Limited assurance provided, Negative opinion expressed
C. Reasonable assurance provided, Positive opinion expressed
D. No assurance provided, Positive opinion expressed
E. No assurance provided, Negative opinion expressed
The correct answer is (B)
Past Question Review:
The degree of assurance that the auditor can provide about the reliability of the financial statements will depend on the amount of work performed in carrying out the assurance process and the results of that work.
The resulting assurance falls into one of two categories:
Reasonable Assurance – A high level of assurance provided by the practitioner’s conclusion expressed in a positive form, e.g. “in our opinion the financial statements give a true and fair view”. The objective of a statutory audit is to provide reasonable assurance. The assurance of an audit may be provided by internal auditor or external auditors.
Limited Assurance – A moderate level of assurance provided by the practitioner’s conclusion expressed in a negative form, e.g. “Based on our review, nothing has come to our attention that causes us to believe that the accompanying financial statements do not give a true and fair view”.
N.B: This question tests the keyword "review". The objective of a review engagement is often to provide limited assurance.
The correct answer is (B)
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