CPA Exam — AUDForming Conclusions and ReportingMedium
A practitioner is engaged to report on an entity's compliance with specified requirements. The engagement is structured to provide a high level of assurance. What type of report conclusion should the practitioner provide?
- AA disclaimer of assurance.
- BA summary of findings only.
- CA conclusion of negative assurance.
- DAn opinion on the entity's compliance.
Show answer & explanationAnswer & explanation
Correct answer: D. An opinion on the entity's compliance.
When an attestation engagement provides a high level of assurance (an examination), the practitioner expresses an opinion on the subject matter, in this case, the entity's compliance with specified requirements.
Why the other options are wrong
- A. A disclaimer of assurance is issued when no assurance can be provided, or the practitioner is not independent.
- B. A summary of findings only is provided in agreed-upon procedures engagements, which offer no assurance.
- C. Negative assurance is provided in review engagements, which offer limited assurance.
Compliance Engagement (Examination)
An attestation engagement providing a high level of assurance on an entity's compliance with specified requirements, resulting in a positive opinion.
- Provides high level of assurance.
- Conclusion is an opinion (positive assurance).
- Involves extensive procedures to obtain sufficient evidence.
Memory trick: ARE You Concluding Right? (Agreed, Review, Examination)