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AUD MCQ – When to Express Positive Assurance?

An auditor provides positive assurance in all of the following reports except:

A)  A report on other comprehensive basis of accounting financial statements

B) A report on compliance with contractual or regulatory requirements related to audited financial statements

C) A report on a specified account in a financial statement

D) A report on a financial presentation to comply with contractual agreements or regulatory requirements

A report on compliance with contractual or regulatory requirements related to audited financial statements is correct. Compliance engagements can be very sneaky because the CPA could perform an examination engagement, which expresses positive assurance, but only if it is not performed in conjunction with an audit.

If the compliance report is performed in conjunction with an audit, then a “review” must be performed, and the CPA would express negative or limited assurance. Since a review must be performed, this is the only engagement that would not express positive assurance, which is why it is the correct answer.

A report on a financial presentation to comply with contractual agreements or regulatory requirements is incorrect. This describes an examination engagement, which is a type of attest engagement that would be performed under SSAE standards. In an examination engagement, the CPA would express “positive” assurance.

A report on other comprehensive basis of accounting financial statements is incorrect. This option relates to special purpose frameworks and is when a specific framework is used to prepare financial statements (cash basis, tax basis, contractual basis, etc.) A report on “other comprehensive basis of accounting financial statements” would be performed as an audit. In an audit, “positive assurance” is expressed.

A report on a specified account in a financial statement is incorrect. When the CPA reports on a single statement, specific account, or specific element in a financial statement, this is a considered a “single statement audit”. The auditor would express “positive” assurance in a single statement audit.


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