F8 KNOWLEDGE SUMMARY-SKANS SCHOOL OF ACCOUNTANCY
4
Types of assurance assignments
Reasonable assurance
Limited assurance
An Assurance engagement in which the Practioner
reduces engagement risk to an acceptably low
level in the circumstances
of the engagement as
the basis for the practitioner’s conclusion.
An assurance engagement in which the practitioner
reduces engagement risk to a level that is acceptable
in the circumstances of the engagement but where that
risk is greater than for a reasonable
assurance
engagement
Example: External Audit
Example: Review of financial
statements
High level of assurance but NOT absolute or 100%
A high but not absolute level of assurance is
provided, this is known as reasonable assurance.
Moderate level of assurance
The practitioner gathers sufficient evidence to be
satisfied that the subject matter is plausible; in this case
negative assurance is given
whereby the practitioner
confirms that nothing has come to their attention which
indicates that the subject matter contains material
misstatements.
More testing (Analytical tests, test of controls and
substantive testing)
Going concern
review carried out
Lesser testing-focus on obvious errors only
(Analytical testing and Enquiry)
No going concern
review
The procedures undertaken are not nearly as
comprehensive as those in an audit, with procedures
such as analytical review and enquiry used extensively. In
addition, the practitioner does not need to comply with
ISAs as these only relate to external audits.
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