ACCA Advanced Audit and Assurance (AAA) Practice Exam

What is a key feature of an assurance engagement?

1. It requires a two-party relationship

2. It must involve a financial audit by law

3. It involves measuring against suitable criteria

4. It focuses solely on financial performance

The correct answer is: It involves measuring against suitable criteria

In an assurance engagement, a key feature is that it involves measuring the subject matter against suitable criteria. This aspect is crucial because the engagement is designed to provide an independent assessment of the information or data presented. Suitable criteria provide the framework against which the reliability and accuracy of the information are evaluated, ensuring that the users of that information can place their trust in it. For instance, in an assurance engagement regarding environmental reports, the information would be measured against recognized environmental standards or benchmarks. This evaluation forms the basis of the subjective opinion expressed by the practitioner, whether it’s an audit, review, or other assurance services. The other options do not capture this essential feature effectively. For example, a two-party relationship is common in many engagements but is not unique to assurance engagements. The statement about requiring a financial audit by law restricts the definition of assurance when in reality, assurance engagements can encompass a range of issues beyond financial audits. Finally, while the focus of an assurance engagement can include financial performance, it is not limited to that domain; it can also address compliance, non-financial information, and other areas where stakeholders seek assurance about the reliability of the data presented.