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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Developments in sustainability assurance

Orlon Retail asks its auditor to provide limited assurance rather than reasonable assurance over its sustainability report to reduce cost. The finance director asks how the two levels differ. Which statement is correct?

Limited assurance involves less extensive procedures and is expressed in negative form, while reasonable assurance is a high but not absolute level expressed as a positive conclusion. Neither is a guarantee, and the difference lies mainly in the evidence gathered and the wording of the conclusion.

  1. ALimited assurance is expressed as a positive opinion that the information is free from material misstatement, while reasonable assurance is expressed negatively
  2. BLimited assurance involves less extensive evidence gathering and results in a negatively worded conclusion, whereas reasonable assurance gives a positively worded conclusion at a high but not absolute levelCorrect
  3. CReasonable assurance provides an absolute guarantee, whereas limited assurance provides a moderate level
  4. DBoth levels require identical procedures but differ only in the materiality applied

Explanation

Reasonable assurance is a high but not absolute level, expressed positively. Limited assurance involves fewer procedures, giving a meaningful level of assurance, and is expressed negatively (nothing has come to our attention). Option A reverses the wording, and option C wrongly calls reasonable assurance absolute.

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