What type of assurance does the independent auditor provide regarding financial statements?

The independent auditor provides reasonable assurance regarding financial statements, which means that the auditor conducts a thorough examination of the financial records and the accounting principles applied. The goal is to ensure that the financial statements present a true and fair view of the entity's financial position and performance in accordance with applicable accounting standards.

Reasonable assurance reflects the fact that while the auditor strives to detect material misstatements, it cannot guarantee that all errors or fraud will be identified. This is due to various limitations, including the inherent risk of fraud and error, the use of sampling rather than examining every transaction, and the reliance on management representations. Therefore, reasonable assurance indicates a high, but not absolute, level of confidence in the financial statements.

In contrast, other options like absolute assurance would imply an unrealistic level of certainty that is not feasible due to the complexities and uncertainties inherent in financial reporting. Limited assurance signifies a lower level of assurance, typically associated with a review rather than an audit, which provides less in-depth scrutiny of the financial statements. Complete assurance also suggests a level of certainty that is unattainable in the auditing profession. Thus, reasonable assurance is the appropriate standard that aligns with the auditor's role and responsibilities.