Final answer:
The level of assurance in a financial statement audit that indicates no material modifications are needed to align with the financial reporting framework is reasonable assurance. It is a high level of assurance that the financial statements are free of significant misstatements and give a true and fair view of the entity's financial status. Option A is the correct answer.
Step-by-step explanation:
Within the context of a financial statement audit, auditors are tasked with providing a level of assurance regarding the accuracy and fairness of a company's financial statements. The question at hand deals with which level of assurance indicates that no material modifications are needed for the financial statements to conform with the applicable financial reporting framework.
The correct level is known as reasonable assurance. Reasonable assurance is a high, but not absolute, level of assurance provided by auditors after conducting a thorough audit. It means that, based on the audit evidence obtained, there are no significant misstatements detected within the financial documents.
Therefore, the financial statements give a true and fair view of the financial position and performance of the entity, in accordance with the relevant financial reporting standards. Although 'reasonable assurance' does not guarantee that the financial statements are completely free of any misstatement, it suggests that any misstatements are not material in nature.
In comparison, limited assurance implies a lower level of certainty due to a more restricted review than an audit, and no assurance provides no opinion whatsoever. Thus, the option that states no material modifications should be made to the financial statements for them to be in accordance with the applicable financial reporting framework is A. Reasonable Assurance.