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Dear Kim,
In the question above one of requirements ask:
(c) Discuss the content of the report which would be issued on the prospective financial information, explaining the level of assurance which is provided. (4 marks)So I went on and discussed the level of assurance and stated that limited assurance and reasonable assurance can be expressed
As stated in p.9 of ISAE 3400:
However, when in the auditor’s judgment an appropriate level of satisfaction has been obtained, the auditor is not precluded from expressing positive assurance regarding the assumptions.Why then the answer is saying that only limited assurance can be expressed?
Am I misreading the standard?Thanks,
ArtemThe nature of PROSPECTIVE financial information means that the audit can never give anything but limited assurance because procedures will necessarily be limited (to such things as review and inquiry).
Only if information is HISTORIC is it possible to verify it – and then only with reasonable assurance if we’re talking about financial statements.
As you quote – the professional accountant might be able to give “reasonable assurance” on the assumptions underlying PFI – BUT, I think that highly unlikely – it would be very confusing to the reader of the reporting accountant’s report to have different levels of assurance expressed on different elements of the subject matter.
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