Final answer:
A practitioner's engagement that provides limited assurance on financial statements, with no need for material modifications, is best characterized as a review engagement.
Step-by-step explanation:
An engagement performed by a practitioner to provide limited assurance that financial statements need no material modifications is best described as a review engagement. Unlike an audit engagement, which provides a high level of assurance, a review is less extensive and designed to deliver limited assurance that there are no material modifications that should be made to the financial statements for them to be in conformity with the applicable financial reporting framework. A compilation engagement involves assembling financial data into a set of financial statements without providing any assurance, while an assurance engagement is a broader term that refers to engagements where a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.