Assurance Services, Attestation Services and Non-Assurance Services

In this video, I discuss the difference between assurance and non assurance services. ✔️Accounting students and CPA Exam candidates, check my website for additional resources: https://farhatlectures.com/ 0:00 Introduction Here's a quick summary of the video: Assurance Services Overview (0:08): Companies often make claims, and assurance services involve a third party assessing these claims to provide unbiased information. Attestation Services (3:00): CPAs offer attestation services, a subset of assurance services, where they issue a report or opinion on a company's claims (assertions). Non-Assurance Services (4:23): These include tax services, consulting (when not providing an opinion), bookkeeping, and management consulting. Audited Financial Statements (5:25): These are a key attestation service where auditors issue a report on whether financial statements comply with accounting standards. Reviews (8:19): Reviews offer a lower level of assurance than audits and involve less extensive evidence gathering. Other Attestation Services (9:39): These include compliance with loan agreements and internal control assessments. Assurance Services by Non-CPAs (12:45): Many entities other than CPAs can provide assurance services if they are competent, independent, and trustworthy. 📧Connect with me on social media: https://linktr.ee/farhatlectures #cpaexam #accountingstudent #auditcourse Assurance services, non assurance services, attestation, reviews. An assurance service is an independent professional service that improves the quality of information for decision makers. Such services are valued because the assurance provider is independent and perceived as being unbiased with respect to the information examined. Individuals who are responsible for making business decisions seek assurance services to help improve the reliability and relevance of the information used as the basis for their decisions. Attestation Services One category of assurance services provided by CPAs is attestation services. An attestation service is a type of assurance service in which the CPA firm issues a report about a subject matter or assertion that is made by another party. Primary categories of attestation services include: Audit of historical financial statements Audit of internal control over financial reporting Review of historical financial statements Other attestation services that may be applied to a broad range of subject matter Audit of Historical Financial Statements In an audit of historical financial statements, management asserts that the financial statements are fairly stated in accordance with applicable U.S. or international accounting standards. An audit of these statements is a form of attestation service in which the auditor issues a written report expressing an opinion about whether the financial statements are fairly stated in accordance with the applicable accounting standards. These audits are the most common assurance service provided by CPA firms. Audits are designed to provide reasonable assurance that the financial statements are free of material misstatements. Reasonable assurance is a high, but not absolute level of assurance. This level of assurance is usually sufficient to meet the information needs of financial statement users. Much of this book is about how auditors design tests to provide this level of assurance, considering the client’s business and industry and risks of material misstatements in the financial statements. Publicly traded companies in the United States are required to have audits under the federal securities acts. Auditor reports can be found in all public companies’ annual financial reports. Most public companies’ audited financial statements can be accessed over the Internet from the Securities and Exchange Commission (SEC) EDGAR database or directly from each company’s Web site. Many privately held companies also have their annual financial statements audited to obtain financing from banks and other financial institutions. Government and not-for-profit entities often have audits to meet the requirements of lenders or funding sources. Audit of Internal Control over Financial Reporting For an audit of internal control over financial reporting, management asserts that internal controls have been developed and implemented following well established criteria. Section 404 of the Sarbanes–Oxley Act requires public companies to report management’s assessment of the effectiveness of internal control. The Act also requires auditors for larger public companies to attest to the effectiveness of internal control over financial reporting. This evaluation, which is integrated with the audit of the financial statements, increases user confidence about future financial reporting, because effective internal controls reduce the likelihood of future misstatements in the financial statements.