Mary Moras was reviewing the previous year's audited financial statements of a clothing manufacturer. Her manager explained to her that for a financial statement audit, the clothing company was the accountable party, its shareholders were the users, and the subject matter was the financial statements. What kind of audit engagement was her manager describing?
A) consulting engagement
B) assurance engagement
C) review engagement
D) compliance engagement

Question

Quizplus · Accepted Answer

The description provided by Mary's manager matches that of an assurance engagement, where an independent auditor provides an opinion on the reliability of an entity's financial statements for the benefit of its users, such as shareholders. The auditor provides a reasonable assurance that the statements are free from material misstatement, but does not provide a guarantee. Consulting engagements involve providing advice or recommendations to clients, review engagements involve limited assurance on financial statements, and compliance engagements involve ensuring adherence to a specific set of rules or regulations.

Mary Moras Was Reviewing the Previous Year's Audited Financial Statements