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

Kestrel LLP is asked by a bank to report on whether Dunmore Co has complied with the financial covenants in its loan agreement. Kestrel will gather evidence and give a conclusion on compliance, with the report stating that nothing has come to its attention to indicate non-compliance. Which engagement type is this?

This is a limited assurance engagement under ISAE 3000 (Revised). The practitioner gathers evidence and gives a negatively worded conclusion that nothing indicates non-compliance. Reasonable assurance would require a positive opinion, while compilation and agreed-upon procedures provide no assurance conclusion.

  1. AA limited assurance engagement under ISAE 3000 (Revised)Correct
  2. BA reasonable assurance engagement under ISAE 3000 (Revised)
  3. CA compilation engagement under ISRS 4410 (Revised)
  4. DAn agreed-upon procedures engagement under ISRS 4400 (Revised)

Explanation

A conclusion worded negatively, such as nothing has come to attention, is the form used for limited assurance. Reasonable assurance uses a positive opinion. Compilation and agreed-upon procedures give no assurance conclusion.

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