What is Reasonable assurance?
In short
Reasonable assurance is a high, but not absolute, level of assurance that the financial statements as a whole are free from material misstatement. It is the level an audit provides.
Key takeaways
- It isn't absolute because of inherent limitations, such as the use of judgment, testing samples rather than everything and the possibility of collusion.
- A review provides limited assurance; a compilation provides none.
- The auditor's report explains that reasonable assurance is not a guarantee.
Where it's tested
AUD: Engagement Acceptance & Quality Management — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Before accepting a new audit engagement, who is responsible for initiating communication with the predecessor auditor, and what permission is required?