What is the difference between reasonable and limited assurance?
No assurance engagement can provide absolute assurance over the EER report.
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Reasonable assurance
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Limited assurance
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Level of assurance
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High, but not an absolute level of assurance
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Lower than in a reasonable assurance engagement, but a level of assurance that still enhances the intended users’ confidence about the subject matter being reported
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Practitioner’s report
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The practitioner’s report includes a positive conclusion regarding, for example, whether the subject matter information is prepared, in all material respects, in accordance with the applicable criteria.
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The practitioner’s report includes a negative form of assurance, for example, about whether any matters have come to the practitioner’s attention that cause them to believe the subject matter information is not prepared, in all material respects, in accordance with the applicable criteria.
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CSAE 3000 contemplates two levels of assurance: reasonable and limited. Understanding the difference between the two, in practical terms, may be challenging. The work effort for a reasonable assurance engagement may be better understood as it is similar to that for a financial statement audit. Limited assurance can cover a range of assurance from:
- just above assurance that is likely to enhance the intended users’ confidence about the subject matter information to a degree that is clearly more than inconsequential (lower end of the range of limited assurance); to
- just below reasonable assurance (upper end of the range of limited assurance).
Because the level of assurance in a limited assurance engagement varies, the practitioner’s report summarizes the procedures performed, recognizing that an appreciation of the nature, timing, and extent of the procedures is essential to understanding the practitioner’s conclusion.
Appendix 3 of the IAASB’s EER non-authoritative guidance provides a table with examples of how reasonable and limited assurance may differ. It also shows how limited assurance toward the lower end of the range may differ from limited assurance toward the upper end of the range.
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