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Assurance services
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Assurance services have been defined by the American Institute of Certified Public Accountants (AICPA) as 'Independent Professional Services that improve information quality or its context'. ' Assurance services reduce the information risk; risk that the information provided is incorrect, on more than just financial data. The major purpose of assurance services is to provide independent and professional opinions that improve the quality of information to management as well as other decision makers within a given firm.
Audits actually can be considered a type of assurance service. However audits are only designed to test the validity of the financial statements and that only. Under an assurance engagement CPA's can provide a variety of services ranging from information systems security reviews to customer satisfaction surveys. Assurance services unlike audit and attestation services, that are often highly structured, assurance services tend to be customized and implemented when it is a smaller group of decision makers within the firm. Often managers must make decisions on things they have incomplete or inaccurate data for, decisions made on this data can lead to incorrect decisions and increases the overall business risk. In this respect assurance services can be very helpful in reducing this risk and help mangers or decision makers make more confident decisions that can lead to 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 not been audited by an independent CPA 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 consulting services are when a CPA (Certified Public Accountant) uses his professional knowledge to make recommendations for a future event or a procedure, such as the design of an information system or accounting control system. Contrast assurance services are designed to test the validity of past data of the business cycles. Although there is no boundary to what a CPA can test in assurance services, a CPA will not likely accept 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.
Other examples of assurance services include:
- Business risk assessment
- Information systems security review
- Customer satisfaction survey
- Internal audit outsourcing
- Accounts receivable review
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