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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Specific assignments

Banyan LLP is engaged to review the interim financial information of Sequoia plc, whose financial statements Banyan also audits. Under ISRE 2410, which statement about the engagement is correct?

Under ISRE 2410 the auditor of the entity uses the understanding of the entity, its environment and internal control gained through the audit to plan the review and target inquiries and analytical procedures. The engagement gives limited assurance only, not a positive audit opinion.

  1. AThe reviewer needs no understanding of the entity's internal control because only analytical procedures are performed
  2. BThe reviewer should use the understanding of the entity and its environment, including internal control, gained from the audit to plan the review and focus inquiries and analytical proceduresCorrect
  3. CThe reviewer must obtain reasonable assurance by testing internal controls and performing substantive tests of detail on all material balances
  4. DThe reviewer must issue a positive opinion that the interim information is true and fair

Explanation

ISRE 2410 applies to the auditor of the entity. The reviewer uses knowledge of the entity, its environment and internal control gained from the audit to plan the review and focus procedures on likely misstatement areas. It remains a limited assurance engagement, so tests of detail for reasonable assurance and a positive opinion are not required.

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