Chapter 16: Reporting on assurance engagements - review engagements

Question 1

What if an assurance conclusion needs to be modified and the problem is a material, pervasive misstatement?

Answer 1

An adverse conclusion will be given

Question 2

What if an assurance conclusion needs to be modified and the problem is a material but not pervasive misstatement?

Answer 2

A qualified conclusion will be issued

Question 3

What if an assurance conclusion needs to be modified and it is a limitation on scope that is both material and pervasive?

Answer 3

A disclaimer of conclusion will be issued

Question 4

What if an assurance conclusion needs to be modified and it is a limitation on scope that is material but not pervasive?

Answer 4

A qualified conclusion will be issued

Question 5

What standard will assist in the comparison of audit reports to assurance reports?

Answer 5

• ISA 700
• ISRE 2400
• ISAW 3400

Question 6

How does a review engagement differ from an audit report? (review engagement)

Answer 6

The conclusion of the assurance report following the review of the financial information provides limited/moderate assurance and is expressed negatively in the form of ‘nothing has come to our attention that causes us to believe that the financial statements do not give a true and fair view’

Question 7

How does a review engagement differ from an audit report? (audit report)

Answer 7

Audit engagement:
The opinion in the auditor’s report on financial statements is expressed positively and provides reasonable assurance that the financial statements:
- give a true and fair view of the state of the company’s affairs
- have been properly prepared in accordance with the applicable financial reporting framework
- have been prepared in accordance with the requirements of the Companies Act 2006

Question 8

What are the reasons for the difference between a review engagement and an audit report?

Answer 8

The objective of a limited assurance engagement is to reduce risk to an acceptable level whereas the objective of reasonable assurance engagement is to reduce risk to a low level

As a result the work undertaken on an audit engagement is wider in scope and includes tests of control and tests of detail