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

Kestrel & Co, a firm of accountants, is engaged to perform a review of the annual financial statements of Lumen Foods, a private company that is not required to have an audit. The engagement will be performed under ISRE 2400 (Revised). Which statement best describes the level of assurance the firm will give in its conclusion?

A review engagement under ISRE 2400 provides limited assurance. The practitioner reports in negative form, stating that nothing has come to their attention suggesting the financial statements are materially misstated. A positive opinion giving reasonable assurance is characteristic of an audit, not a review.

  1. AReasonable assurance, expressed as a positive opinion that the statements give a true and fair view
  2. BLimited assurance, expressed in a negative form that nothing has come to the practitioner's attention indicating material misstatementCorrect
  3. CNo assurance, because the work consists only of compiling the financial statements
  4. DAbsolute assurance, because the practitioner is a professional accountant

Explanation

A review under ISRE 2400 provides limited assurance, mainly through enquiry and analytical procedures. The conclusion is expressed negatively. A positive opinion is the form used for an audit, which gives reasonable assurance.

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