ACCA AA · Chapter 1 · Question 4 of 8
Which of the following is an inherent limitation of an audit that explains why only reasonable, rather than absolute, assurance can be given?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Much of the audit evidence obtained is persuasive rather than conclusive
Explanation
ISA 200 explains that audit evidence is generally persuasive rather than conclusive, financial reporting involves judgement, and there are practical limits on time and cost. ISAs do not prohibit 100% testing; it is simply often impractical. Auditors must consider fraud under ISA 240 and must challenge management's judgements with professional scepticism.
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