Podcast
Questions and Answers
What determines whether evidence is sufficient in an assurance engagement?
What determines whether evidence is sufficient in an assurance engagement?
- The practitioner's expertise
- The level of risk associated with the engagement
- The appropriateness and sufficiency of the evidence (correct)
- The type of opinion given
What is the primary difference between reasonable assurance and limited assurance?
What is the primary difference between reasonable assurance and limited assurance?
- The level of evidence obtained to support the opinion (correct)
- The size of the property being surveyed
- The type of practitioner providing the assurance
- The level of risk associated with the engagement
Why can a surveyor only give limited assurance if they are only given access to part of the building?
Why can a surveyor only give limited assurance if they are only given access to part of the building?
- Because they are not allowed to enter the property
- Because they are not experienced enough
- Because they do not have the necessary equipment
- Because they cannot inspect the entire property (correct)
What is the purpose of obtaining evidence in an assurance engagement?
What is the purpose of obtaining evidence in an assurance engagement?
What is the characteristic of reasonable assurance?
What is the characteristic of reasonable assurance?
What is the primary factor that determines the level of assurance in an assurance engagement?
What is the primary factor that determines the level of assurance in an assurance engagement?
What is the relationship between the level of assurance and the type of engagement?
What is the relationship between the level of assurance and the type of engagement?
What is the characteristic of a negative assurance statement?
What is the characteristic of a negative assurance statement?
What is the purpose of seeking evidence in an assurance engagement?
What is the purpose of seeking evidence in an assurance engagement?
What is the difference between a positive and negative assurance statement?
What is the difference between a positive and negative assurance statement?
Study Notes
Assurance Engagements Overview
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Reasonable Assurance
- High level of assurance, less than absolute.
- Engagement risk is reduced to an acceptably low level.
- Allows for a positive conclusion to be expressed.
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Limited Assurance
- More than inconsequential but less than meaningful.
- Opinions expressed negatively based on available evidence.
Evidence and Assurance Levels
- Evidence obtained is crucial in determining the type of assurance.
- A surveyor can only provide reasonable assurance if allowed full access for inspection.
- Limited access leads to limited assurance regarding structural soundness.
Key Differences Between Assurance Types
- Evidence Obtained: Varies significantly between reasonable and limited assurance engagements.
- Type of Opinion Given: Depends on the level of assurance; a lower level of evidence is sufficient for limited assurance.
Importance of Evidence
- Sufficient and appropriate evidence must be obtained in all assurance engagements.
- The sufficiency and appropriateness of evidence relate directly to the level of assurance sought.
Types of Opinions in Assurance Engagements
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Positive Opinion: Practitioner can definitively state the reasonableness of a report, indicating strong support for the conclusion.
- Example phrase: "In my opinion, the statement by the Chairman regarding X is reasonable."
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Negative Opinion: Indicates no evidence found suggesting unreasonableness, but implies uncertainty.
- Example phrase: "Nothing has come to my attention indicating the statement is not reasonable."
Conclusion Context
- Positive conclusions reflect high confidence in assurance provided.
- Negative conclusions allow for uncertainty, reflecting a lower evidence threshold for assurance engagements.
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Description
Test your understanding of auditing concepts, specifically reasonable assurance and limited assurance, and how they relate to engagement risk and conclusion expression. Identify the key differences between these two important concepts in the auditing process.
