Accounting Multiple Choice Question – 2 August 2025

In relation to the external audit or statutory audit of a limited company in the UK, a colleague of Alex, an accountant, has made three statements below.

Statement 1 – A statutory audit gives reasonable assurance that the financial statements give a true and fair view.

Statement 2 – A negative assurance conclusion gives a limited level of assurance.

Statement 3 – Reasonable assurance is absolute assurance of the correctness of the subject matter.

Identify whether the statements made above are true or false?

Select ONE answer:

1. Statement 1. True and Statement 2. False and Statement 3. False
2. Statement 1. False and Statement 2. False and Statement 3. True
3. Statement 1. True and Statement 2. True and Statement 3. False
4. Statement 1. False and Statement 2. True and Statement 3. True

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == >    True – Whereas the statutory audit provides reasonable assurance through a positive assurance conclusion, in a review engagement, limited assurance is provided with the issue of the negative assurance conclusion. This can be seen in the wording of the two conclusions. True – The positive assurance conclusion includes wording ‘the financial statements give a true and fair view’, whereas the negative assurance conclusion includes the wording ‘nothing has come to our attention’, emphasising the limited nature of the assignment. False – Reasonable assurance is high assurance provided on the truth and fairness of the subject matter as opposed to absolute assurance of the correctness of the subject matter.
4. Not correct

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