Why do auditors only provide reasonable assurance in an audit of FS?

Reasonable assurance in auditing refers to the confidence level an auditor aims to achieve
when conducting an audit. The auditor's goal is to obtain reasonable assurance that the
financial statements are free from material misstatement, whether caused by error or fraud.
This is achieved through the application of audit procedures and the gathering of sufficient
appropriate audit evidence. However, it's important to note that reasonable assurance does
not guarantee absolute certainty, as audits are conducted on a sample basis and cannot detect
all instances of error or fraud. Most of the audit evidence that auditors rely on to form
conclusions and audit opinions is persuasive rather than affirmative.
Auditors only provide reasonable assurance because:
Audit limitations: auditors face challenges such as the size and complexity of the
organization, the time and resources available for the audit, and inherent limitations of audit
procedures. These limitations prevent auditors from ensuring the absolute accuracy of
financial statements.
Judgments and estimates: financial statements often include provisions that require
judgments or estimates, such as provisions for bad debts, write-downs of assets, or
contingencies. Auditors consider these estimates and judgments but cannot completely
eliminate the risk of errors or bias by management in these assessments.
Confidence in management representations: auditors on management representations
regarding the accuracy and financial information.
Risk of fraud: auditors design procedures for material misstatements due to errors or fraud.
However, fraudulent schemes can be complex and involve collusion or intentional efforts to
conceal fraud. Despite the auditor's efforts, there is a risk that some instances of fraud may
not be detected.
Complexity of transactions and systems: In the business environment financial transactions
and systems can be very. Auditors may be faced with difficulties in assessing the
complexity of these transactions and systems, which may impact their ability to provide
absolute assurance.