ACCA Advanced Audit and Assurance (AAA) Practice Exam

Who is the reasonable party in an assurance engagement?

1. The party conducting the audit

2. The individual or entity responsible for the subject matter

3. The intended user of the assurance report

4. The practitioner conducting the evaluation

The correct answer is: The individual or entity responsible for the subject matter

In an assurance engagement, the reasonable party is specifically the individual or entity responsible for the subject matter. This party is crucial because they are accountable for the information that is being provided, which may include financial statements, internal controls, operational processes, or any other subject matter under review. Their responsibilities include ensuring the accuracy and integrity of the data, and they function as the basis for the assurance the practitioner provides. In this context, the assurance report ultimately aims to provide valuable insights to the intended users, but it is the responsible party that carries the burden of presenting truthful and accurate subject matter for evaluation. This distinction is essential because the effectiveness and reliability of the assurance engagement largely depend on the competence and honesty of the responsible party. While the practitioner conducting the evaluation and the party conducting the audit play important roles within the engagement, they do not hold the responsibility for the content of the subject matter itself. The intended user is also key, as they rely on the assurance report, but they are not the party responsible for the subject matter. Therefore, identifying the responsible party as the reasonable party aligns with the definitions and roles established within assurance engagements.