Audit Expectations – NBC Institute

AA – July 2023 – L2 – Q2c – Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities

Identification of inherent limitations of audit and misconceptions regarding the role of an auditor.

Question

c) Reasonable assurance is the highest level of assurance auditors may provide. However, due to the limitations of auditing, it is impossible to guarantee ‘absolute’ assurance. Some users of financial statements, however, have the misconception that an audit provides absolute assurance and that the audit opinion guarantees that the financial statements are ‘accurate.’ The ‘Expectations Gap’ refers to these and other misunderstandings regarding the work of an auditor.

Required:
i) State FOUR (4) inherent limitations of an audit that makes it impossible to provide ‘absolute’ assurance.

(6 marks)
ii) State THREE (3) misconceptions about the role an auditor plays. (4 marks)

Answer

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Tags: Audit Expectations, Audit Limitations, Misconceptions, Reasonable Assurance
Level: Level 2

Topic: Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities
Series: JULY 2023

Question Tag: Audit Expectations

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AA – July 2023 – L2 – Q2c – Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities

Identification of inherent limitations of audit and misconceptions regarding the role of an auditor.

AA – July 2023 – L2 – Q2c – Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities

Identification of inherent limitations of audit and misconceptions regarding the role of an auditor.

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Question Tag: Audit Expectations

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AA – July 2023 – L2 – Q2c – Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities

Identification of inherent limitations of audit and misconceptions regarding the role of an auditor.

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AA – July 2023 – L2 – Q2c – Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities

Identification of inherent limitations of audit and misconceptions regarding the role of an auditor.

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