|This article needs additional citations for verification. (June 2010)|
Assurance service is an independent professional service, typically provided by Chartered or Certified Public Accountants, with the goal of improving the information or the context of the information so that decision makers can make more informed, and presumably better, decisions. Assurance services provide independent and professional opinions that reduce the information risk (risk that comes from incorrect information).
Audits can be considered a type of assurance service. However, audits are only designed to test the validity of the financial statements. Under an assurance engagement, accountants can provide a variety of services ranging from information systems security reviews to customer satisfaction surveys. Unlike audit and attestation services that are often highly structured, assurance services tend to be customized and implemented when performed for a smaller group of decision makers within the firm. Often managers must make decisions on things they have incomplete or inaccurate data for, and decisions made on such data may be incorrect and increase the overall business risk. In this respect, assurance services can be very helpful in reducing such risk and help managers or decision makers make more confident decisions within a given firm. This is similar to audits in that investors will choose to invest in a firm that is publishing financial statements that have been audited by an independent firm.
Assurance services can test financial and non-financial information; due to this assurance services can be classified as consulting services. However, assurance services are not considered consulting 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 an accountant can test in assurance services, a practitioner is discouraged from accepting an assurance engagement in which his firm or previous experiences does not provide them with enough expertise to make a professional opinion on the given data.
Assurance services done by accountants differ from nonassurance services.
Other examples of assurance services include:
- Accounts receivable review
- Business risk assessment
- Comfort letter
- Customer satisfaction survey
- Information systems security review
- Internal audit outsourcing
- Medical billing services
- "Welcome to Assurance Services". American Institute of Certified Public Accountants. Archived from the original on 5 December 2006. Retrieved 14 June 2010.
- "SSAE #10 Attest Engagements, AT §101, clause .21, second general standard.". American Institute of Certified Public Accountants.
- "International Standard on Assurance Engagements (ISAE) 3402, §13(a)(i)". International Auditing and Assurance Standards Board.
- More information on the contents of an ISAE3000 report
- "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.