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

Tamarind & Co, a firm of accountants, is engaged to perform a review of the annual financial statements of Lotus Ltd, a private company, under ISRE 2400 (Revised). The engagement partner explains the nature of the conclusion to the directors. Which statement correctly describes the conclusion the practitioner will express?

A review under ISRE 2400 gives limited assurance expressed in negative form: nothing has come to the practitioner's attention suggesting the financial statements are not prepared in accordance with the framework. Positive reasonable assurance belongs to an audit, and no assurance belongs to compilation.

  1. AReasonable assurance, stated positively, that the financial statements give a true and fair view
  2. BLimited assurance, stated in the negative form, that nothing has come to the practitioner's attention indicating the statements are not prepared in accordance with the applicable frameworkCorrect
  3. CNo assurance, because a review only involves compiling information supplied by management
  4. DAbsolute assurance that no material misstatement or fraud exists in the financial statements

Explanation

A review engagement under ISRE 2400 provides limited assurance, expressed negatively: the practitioner states that nothing has come to attention causing them to believe the statements are not prepared, in all material respects, in accordance with the framework. Reasonable assurance is the level for an audit, so the first option is wrong. Compilation provides no assurance, which is a different engagement.

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