ICAEW ARF · Chapter 1 · Question 10 of 10
Which of the following statements correctly compares reasonable assurance and limited assurance engagements?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Engagement risk is reduced to a lower level in a reasonable assurance engagement, so the procedures performed are generally more extensive
Explanation
In a reasonable assurance engagement the practitioner reduces engagement risk to an acceptably low level, which requires more extensive evidence and supports a positive opinion. In a limited assurance engagement the risk is higher, the procedures (often inquiry and analytical review) are more restricted and the conclusion is negative. Risk can never be eliminated completely.
More The concept of and need for assurance MCQs
- Q2In the statutory audit of a UK limited company, which party is the 'responsible party' in the three-party relationship?
- Q3Which of the following wordings would be typical of the conclusion in a limited assurance engagement?
- Q4What is the main reason why the shareholders of a large company need an independent audit of its financial statements?
- Q5Which of the following is NOT an inherent limitation of an audit?
- Q6Which of the following public perceptions is an example of the 'expectation gap' in auditing?