Assurance services

What Are Assurance Services?

Assurance services are a type of independent professional service usually
provided by certified or chartered accountants such as CPAs. Assurance
services can include a review of any financial document or transaction, such as a
loan, contract, or financial website. This review certifies the correctness and
validity of the item being reviewed by the CPA.

Providers of assurance services will help clients navigate the complexities, risks
and opportunities in their partner networks by proactively managing and
monitoring risks presented by third-party relationships. Businesses use
assurance services to increase the transparency, relevance and value of
information they disclose to the market and their investors. Many find by sharing
business performance better; it becomes a sustainable growth and competitive
differentiation strategy.

The Basics of Assurance Services

According to the AICPA website, "Assurance Services are defined as
'independent professional services that improve the quality or context of
information for decision makers.' Today's business environment is marked by
increased competition and the need for quicker and better information for
decisions. In addition, the complexity of systems and the anonymity of the
Internet present barriers to growth. Businesses and their customers need
independent assurance that the information on which decisions are based is
reliable. By virtue of their training, experience and reputation for integrity, CPAs
are the logical choice to provide this assurance."

Technical guidance for certified accountants who wish to engage in assurance

services can be found in the ISAE (International Standard on Assurance
Engagements) 3000 and in The Assurance Sourcebook published by the ICAEW
(Institute of Chartered Accountants in England and Wales) that also includes
practical advice for firms choosing among different assurance services.

KEY TAKEAWAYS

 Assurance services are a type of independent professional service usually

provided by certified or chartered accountants such as CPAs.
 Assurance Services are defined as independent professional services that
improve the quality or context of information for decision-makers.
 Businesses use assurance services to increase the transparency,
relevance and value of information they disclose to the market and their
investors.
Types of Assurance Services
Assurance services can come in a variety of forms and are meant to provide the
firm contracting the CPA with pertinent information to ease decision making. For
example, the client could request that the CPA carefully go over all of the
numbers and math that are on the client's mortgage website to ensure that all of
the calculations and equations are correct. Below is a short list of the most
common assurance services.

Risk Assessment
Entities are subjected to greater risks and more precipitous changes in fortune
than ever before. Managers and investors are concerned about whether entities
have identified the full scope of these risks and taken precautions to mitigate
them. This service assures that an entity's profile of business risks is
comprehensive and evaluates whether the entity has appropriate systems in
place to effectively manage those risks.

Business Performance Measurement

Investors and managers demand a more comprehensive information base than
just financial statements; they need a "balanced scorecard." This service
evaluates whether an entity's performance measurement system contains
relevant and reliable measures for assessing the degree to which the entity's
goals and objectives are achieved or how its performance compares to its
competitors.

Information Systems Reliability

Managers and other employees are more dependent on good information than
ever and are increasingly demanding it online. It must be right in real time. The
focus must be on systems that are reliable by design, not correcting the data
after the fact. This service assesses whether an entity's internal information
systems (financial and non-financial) provide reliable information for operating
and financial decisions.

Electronic Commerce
The growth of electronic commerce has been retarded by a lack of confidence in
the systems. This service assesses whether systems and tools used in electronic
commerce provide appropriate data integrity, security, privacy, and reliability.

Health Care Performance Measurement

The motivations in the $1 trillion health care industry have flipped 180 degrees in
the last few years. The old system (fee for service) rewarded those who delivered
the most services. The new system (managed care) rewards those who deliver
the fewest services.

As a result, health-care recipients and their employers are increasingly

concerned about the quality and availability of health care services. This service
provides assurance about the effectiveness of health care services provided by
HMOs, hospitals, doctors, and other providers.

Definition and distinction from other services[edit]

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

1. 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.
2. 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.
3. Suitable criteria – this means that there must be some agreed framework to which the
information may be compared. In the case of an audit, this will be the form of company
accounts mandated by the appropriate laws, regulations and accounting standards in a
particular jurisdiction. For other subject matter, it might be the design and proper operation
(as specified) of the lottery systems and controls.
4. Sufficient appropriate evidence. The practitioner must obtain sufficient appropriate evidence
that the subject matter information (the data related to the subject matter) agrees with the
criteria.
5. A conclusion expressed in a written report.
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)), but assurance reports can be obtained over many other subject matters and will then be
subject to ISAE 3000 or other individual Standards on Assurance Engagements.
Consulting services are not considered as assurance[2] 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 of the business cycles.
Although there is no boundary to what can be tested by assurance services, professional
accountants cannot accept any engagement for which they do not believe themselves to be
competent.[3][4]
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.

Guidance[edit]
Technical guidance for practitioners wishing to undertake assurance services can be found in ISAE
(International Standard on Assurance Engagements) 3000 ISAE 3000 and in The Assurance
Sourcebook [5] published by ICAEW (Institute of Chartered Accountants in England and Wales which
also includes advice for companies wishing to choose between various assurance services.
See also[edit]

 ISAE 3000

References[edit]

1. ^ "Welcome to Assurance Services". American Institute of Certified Public Accountants. Archived

from the original on 6 April 2005. Retrieved 14 June 2010.
2. ^ International Standard on Assurance Engagements 3000 (Revised 2013), paras 6 (c) and A1.
3. ^ "SSAE #10 Attest Engagements, AT §101, clause .21, second general standard" (PDF). American
Institute of Certified Public Accountants.
4. ^ "International Standard on Assurance Engagements (ISAE) 3402, §13(a)(i)" (PDF). International
Auditing and Assurance Standards Board.
5. ^ "The Assurance Sourcebook". icaew.com. Retrieved 6 April 2016.

Further reading[edit]

 "Does Industry Specialist Assurance of Non-Financial Information Matter to Investors?"

Ferguson, Andrew.; Pundrich, Gabriel. AUDITING: A Journal of Practice & Theory: May 2015,
Vol. 34, No. 2, pp. 121-146.
 "Are Assurance Services Provided by Auditors on Initial Public Offerings Influenced by Market
Conditions?" COPLEY, PAUL A.; DOUTHETT JR., EDWARD B. Contemporary Accounting
Research Summer2009, Vol. 26 Issue 2, p453-476. 24p.
 "Determinants of the Maximum Level of Assurance for Various Assurance Services" Ruhnke,
Klaus; Lubitzsch, Kay. International Journal of Auditing Nov2010, Vol. 14 Issue 3, p233-255.
23p.
 "The Different Types of Assurance Services and Levels of Assurance Provided" Hasan,
Mahreen; Maijoor, Steven; Mock, Theodore J.; Roebuck, Peter; Simnett, Roger; Vanstraelen,
Ann. International Journal of Auditing Jul2005, Vol. 9 Issue 2, p91-102. 12p.
 "The Relative Importance of Firm Incentives versus Country Factors in the Demand for
Assurance Services by Private Entities" FRANCIS, JERE R.; KHURANA, INDER K.; MARTIN,
XIUMIN; PEREIRA, RAYNOLDE. Contemporary Accounting Research Summer2011, Vol. 28
Issue 2, p487-516.
 "Assurance Services for Sustainability Reports: Standards and Empirical Evidence" Manetti,
Giacomo; Becatti, Lucia. Journal of Business Ethics. Jul2009 Supplement 1, Vol. 87, p289-298.
 "The Competitive Market for Assurance Engagements on Greenhouse Gas Statements: Is There
a Role for Assurers from the Accounting Profession?" Huggins, Anna; Green, Wendy J.;
Simnett, Roger. Current Issues in Auditing. 2011, Vol. 5 Issue 2, pA1-A12.

EC reporting and compliance

Aside from opinions for audited financial statements, we also accept requests for the
preparation of General Form for Financial Statements (GFFS) and other reports, which
will be submitted to the Securities and Exchange Commission (SEC) on an as-the-
need-arises or annual bas