The Three A’s: Audit, Attestation & Assurance
By: Selvyn Allotey
Tags: Accounting, Risk, Data Analytics, Attestation Services, Audit

Introduction and Overview of Audit & Assurance

Audit, Attestation & Assurance Services

Audit, Attestation & Assurance generally thought of to be the same sort of service. However, these three are different from each other but do share similarities in representing the common process of an independent accounting firm taking information assembled by someone else and comparing that information to an established set of criteria.

Ultimately, the independent accounting firm provides a report about the results of the service performed. Consequently, this process adds credibility, or integrity to the information thus making it more useful for decision making.

The Relationship Between The Three A’s

Audit Services

Audit services are rather exclusive compared to the other two services. Primarily the audit services include an audit of financial statements and an audit of internal controls over financial reporting (ICFR).

An audit of financial statements provides external financial statement users with an opinion by the auditor on whether the financial statements have been presented fairly in accordance with a suitable financial reporting framework such as the IFRS or the GAAP.

Additionally, an audit of ICFR is to provide financial statement users with an opinion by the auditor on the design and operating effectiveness of ICFR. These audit services enhance the degree of confidence that intended users can place in financial statements.

The only professional who can sign an audit report on historical financial statements and internal controls for a public or private company is a CPA.

Attestation Services

Moreover, when it comes to attestation services, companies produce financial information that go beyond historical financial statements. Some of these include financial forecasts and detailed schedules for specific accounts. The hiring of a CPA to report on the integrity and credibility of this sort of financial information is dubbed as an attestation service.

These services are performed when an independent practitioner or CPA is engaged to issue a report on subject matter that is the responsibility of another party. Since attestation encompasses more than internal controls and historical financial statements, practitioner is used instead of auditor.

Besides this, attestation could also be a review of historical financial statements. Notably, small private companies often view an extensive audit of financial statements in which an auditor must express an opinion on the fair presentation of financial statements as optional and unnecessary. However, during a review engagement, the practitioner will express limited assurance that no material modifications need to be made to the financials. This process makes a review of historical financial statements much more affordable and less extensive and might be more useful for smaller private companies.

Assurance Services

Lastly, the assurance services are done independently to further improve the quality of information or the context for decision makers. Independent implies that the person performing the service is in no way associated with the information curation and creation. Furthermore, the quality refers to the relevance and reliability of the information. The term information refers to any subject matter that can be financial or non-financial, historical, or prospective, standalone data or entire systems of data, internal or external to a company. Essentially, the service encompasses any service a professional uses to improve the quality of information prepared by someone else.

In summary, all the A’s are related to each other but also are different services. Depending on the type of decision maker you are, you would require one or even all of the three services to make an informed decision. These services are to provide credibility, reliability and integrity to cater to all forms of doubt and questions before making a decision.