Audit and Assurance Practice Exam 2025 – The Complete All-in-One Guide for Exam Success!

The correct answer is limited assurance. In audit and assurance, a review engagement typically provides a level of assurance that is less than that of an audit but more than no assurance at all. Limited assurance means that the practitioner has performed inquiries and analytical procedures, which allow them to express a conclusion that there are no material modifications needed for the financial statements to be in conformity with the applicable financial reporting framework.

This is distinct from high assurance, typically provided in an audit, where more extensive testing and verification are conducted, leading to a stronger, more definitive conclusion about the financial statements. The concept of no assurance refers to situations where no level of confidence is provided, such as in a compilation engagement, where the accountant merely compiles the information without providing any assurance on its accuracy or completeness. Moderate assurance isn't typically a defined term in this context; the terminology used in assurance services usually refers specifically to limited or high levels of assurance. This reinforces the understanding that review engagements are designed to provide a comfort level to the users of the financial statements, but with an acknowledgment of the limited scope of work performed compared to an audit.