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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Advertising, tendering, and obtaining professional work and fees

Dunmore LLP's marketing partner proposes an advert stating: 'We have never had an audit client fail, and our audits guarantee that no fraud exists in your business.' Which is the best assessment?

The advert is unacceptable because it is exaggerated and misleading. An audit gives reasonable, not absolute, assurance, so no auditor can guarantee that fraud does not exist. Such a claim creates unrealistic expectations and breaches the IESBA Code's requirement for honest, truthful marketing, even if limited to material fraud.

  1. AAcceptable, because it reassures the public about audit quality
  2. BAcceptable only if the guarantee is limited to fraud above materiality
  3. CUnacceptable, because it makes exaggerated claims and implies assurance the auditor cannot giveCorrect
  4. DUnacceptable only because it refers to client failures rather than fees

Explanation

An audit provides reasonable, not absolute, assurance, and ISA 240 acknowledges the inherent limitations in detecting fraud. Guaranteeing no fraud is misleading and creates unrealistic expectations, breaching the Code's marketing principles. Limiting it to material fraud still implies a guarantee that cannot be given.

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