What are the three levels of assurance provided by financial statements?

• A. compiled
• B. reviewed
• C. audited
• D. compiled, reviewed, audited

Answer: (D)

There are three levels of assurance in financial statements: compilation, review, and audit. A compilation simply arranges information into financial statements with no assurance about accuracy or completeness. A review provides limited assurance through inquiry and analytical procedures, signaling that nothing has come to attention to suggest material misstatement but stopping short of verifying details or testing controls. An audit offers the highest level of assurance—reasonable assurance—based on substantive testing and evaluation of evidence and controls, yielding an auditor’s opinion about conformity with the applicable financial reporting framework. Because these three levels together cover the full spectrum of scrutiny and confidence users may seek, listing all three reflects the complete range of assurance.