Work within a small or medium sized business? See how we can help

Home Services Audit and Assurance

Audit and Assurance

Assurance service is an independent professional service, typically provided by a Certified Public Accountant or a Chartered Certified one.

The goal is improving information or the context of information so that decision makers can make more informed, and presumably better, decisions. Assurance services provide independent and professional opinions that reduce information and key conclusion risk.

Audit and Assurance
Professional opinions that reduce information risk

The technical definition of assurance requires components set out in the International Framework for Assurance Engagements:

  • A three-party relationship – the responsible party who prepares the information to be assured; the independent practitioner who assures the information; and the users who are expected to rely on the information. In the case of an audit, the responsible party is the management of the company, the practitioner is the audit firm and the users are primarily the shareholders.
  • Agreed subject matter – in the case of an audit, this would be the annual accounts of a company. However it could be almost anything in practice – the systems operated by a state lottery, a company’s greenhouse gas emissions, controls over a supply chain etc.

Audits are therefore a type of assurance service. However, audits only test the validity of the assertions in financial statements, and are subject to regulation under International Standards on Auditing. Assurance engagements designed to test historical financial information are referred to as assurance reviews (these are regulated by International Standard on Review Engagements (ISRE 2400).

Consulting services are not considered as assurance because in consulting services, an accountant generally uses their professional knowledge to make recommendations for a future event or a procedure, such as the design of an information system or accounting control system. In contrast, assurance services are designed to test the validity of past data.

Agreed–upon procedures do not constitute an assurance procedure under the above definition, because no conclusion is given. However, they are often loosely referred to as “assurance”. Similarly compilation engagements (which also have no conclusion) are often described as giving assurance, but are not strictly assurance engagements.

Resources

Market Specialists

Amy Daniels
Head of Department
890.934.2900
[email protected]
Nick Cohen
Senior Advisor
890.934.2901
[email protected]
Share this page

Looking for an outstanding business consultant?