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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit-related and assurance services

Brightwell LLP is engaged by the directors of Oakfield Ltd to review the company's greenhouse gas emissions report. The report will be given to Oakfield's lender, Tern Bank, which will rely on it for a loan covenant. The emissions data were prepared by Oakfield's own environmental team. Who is the responsible party in this engagement?

Oakfield Ltd is the responsible party because it is accountable for the underlying subject matter, its emissions data and report. Brightwell LLP is the practitioner who gives the conclusion, and Tern Bank is the intended user relying on it. The three roles are separate in an assurance engagement.

  1. ABrightwell LLP, because it expresses the conclusion
  2. BTern Bank, because it is the intended user
  3. COakfield Ltd, because it is responsible for the underlying subject matter and its preparationCorrect
  4. DThe environmental regulator, because emissions are a public matter

Explanation

In the three-party relationship, the practitioner, responsible party and intended users are distinct. The responsible party is accountable for the underlying subject matter, here Oakfield's emissions data and report. Brightwell is the practitioner and Tern Bank is the intended user, so naming either as responsible party is wrong.

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