Which two factors determine whether assurance is reasonable or limited?

Which two factors determine whether assurance is reasonable or limited?

• A. Amount of work done and nature of evidence.
• B. Company size and sector.
• C. Auditor's fees.
• D. Management qualifications.

Answer: (A)

Two factors determine whether assurance is reasonable or limited: the amount of work performed and the nature of the evidence obtained. If the auditor conducts extensive procedures, tests of controls, and substantive tests across a broad sample, the level of evidence becomes more persuasive. Coupled with evidence that is reliable—such as external confirmations or well-documented records—the conclusions reached can provide reasonable assurance. If procedures are limited—fewer tests, more reliance on inquiries or analytical procedures with less persuasive evidence—the assurance is restricted to a lower level. The other options don’t set the assurance level: company size or sector may influence risk but not the depth of assurance; auditor’s fees and management qualifications don’t determine the assurance level either.

Two factors determine whether assurance is reasonable or limited: the amount of work performed and the nature of the evidence obtained. If the auditor conducts extensive procedures, tests of controls, and substantive tests across a broad sample, the level of evidence becomes more persuasive. Coupled with evidence that is reliable—such as external confirmations or well-documented records—the conclusions reached can provide reasonable assurance. If procedures are limited—fewer tests, more reliance on inquiries or analytical procedures with less persuasive evidence—the assurance is restricted to a lower level. The other options don’t set the assurance level: company size or sector may influence risk but not the depth of assurance; auditor’s fees and management qualifications don’t determine the assurance level either.