## Reasonable Assurance vs Limited Assurance

Both Audit (reasonable assurance) and Review (limited assurance) are performed on historical financial information — economic events that have already occurred, expressed in financial terms (e.g., sales, purchases, closing balances).

### Comparison

Feature	Reasonable Assurance (Audit)	Limited Assurance (Review)
Level of Assurance	High	Lower than audit
Procedures	All six procedure types (detailed)	Primarily Inquiry + Analytical Procedures
Evidence	Sufficient Appropriate Audit Evidence (extensive)	Sufficient Appropriate Evidence (less extensive)
Conclusion Language	Positive — "In our opinion…"	Negative — "Nothing has come to our attention…"
Report Output	Audit Report	Review Report
Typical Use Case	Annual statutory audit	Quarterly interim financial statements

### Practical Context: Listed Companies and Quarterly Reporting

A listed company (FY: April–March) has the option to publish unaudited quarterly financials. At each quarter end, a Limited Review is conducted:

```

Q1 (Apr–Jun 2025) → Limited Review at 30 Jun

Q2 (Jul–Sep 2025) → Limited Review at 30 Sep

Q3 (Oct–Dec 2025) → Limited Review at 31 Dec

Q4 / Full Year → Statutory Audit (Reasonable Assurance)

```

### Memory Aid

Audit = Detailed procedures → High assurance → Positive language
Review = Inquiry + Analytical → Lower assurance → Negative language ("nothing came to our attention")

Worked example

### Example 1

Limited Review (Q3 end): A listed company ends Q3 on 31 December 2025. The CA performs a limited review: inquires with CFO about unusual revenue spikes, compares Q3 revenue with Q3 of prior year (analytical procedure). Report states: 'Nothing has come to our attention that causes us to believe these financial statements do not present fairly…' — negative assurance language.

### Example 2

Annual Audit: The same company's full-year audit (FY ending 31 March 2026) involves physical verification of inventory, debtor confirmations, bank reconciliations, and substantive testing of all major accounts. The auditor concludes: 'In our opinion, the financial statements give a true and fair view…' — positive assurance language.

⚠️ Common exam mistakes

Using positive assurance language ('In our opinion') in a review report — review conclusions are always expressed using negative assurance language
Thinking 'limited assurance' means the practitioner is less careful or competent — the care is identical, but procedures are fewer by design
Forgetting that both audit and review are performed only on historical financial information — neither is appropriate for future projections
Confusing 'lower level of assurance' with 'lower quality report' — they serve different purposes; the level matches the depth of procedures performed

Reference: — SA 700 series (Audit Opinion); SRE 2400/SRE 2410 (Review Engagements)

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Reasonable Assurance (Audit) vs Limited Assurance (Review)

Worked example

⚠️ Common exam mistakes