Types of Assurance Services

Lesson:

Business representatives often make statements, either orally or written, that somehow relate to their businesses.

Unfortunately, not all people speak the truth. Whether by mistake or by intention, many statements aren't quite true.

That's why auditors are hired to give a third-party perspective. These auditors perform due diligence and provide a third-party assessment of the information put forth. This lends credibility to the information and provides confidences to users (such as investors, lenders, and governments) that the information is reliable.

There are three broad categories of assessment.

  • Assurance - The auditor examines information.
  • Attestation - The auditor examines managerial assertions
  • Auditing - The auditors focus on financial statements

If you think about it, auditing is a subset of attestation, and attestation is a subset of assurance.

One way to remember this is that the higher up (alphabetically) the term, the more specific the engagement's focus.

You're interviewing for an audit position with Juliet Corp. and want to impress the firm with your perfect use of accounting jargon.

Here are the relevant facts:

  • you took a closer look at some financial forecasts provided by the firm's managers.
What is the most specific category of service that would apply to this case?

Answer:

  • That engagement was an attestation engagement.

Explanation:

    That engagement was looking at a statement that management put forth.
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