Assurance services

Assurance service is an independent professional service, typically provided by Chartered or Certified Public Accountants or Chartered Certified Accountants, with the goal of 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 risk (risk from incorrect information). The technical definition of assurance requires five 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. 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. 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. 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.