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Assurance Services

as reports without explicit conclusions or reports that are The needs of decision makers are evolving. For
issued only when there are problems. Assurance services decades their needs were generally met by periodic cost-
are often desired to be more customized to information based financial statements. As information technology
needs of decision makers in specific circumstances. To be advances and needs become more decision-specific, deci-
responsive to those needs, the form of CPA communica- sion makers are likely to:
tion is expected to be more flexible. Thus, a significant
difference between assurance and attestation engagements
is that assurance engagements do not necessarily result in Replace their With a
a standard form of report, whereas attestation engage- need for . . . need for . . .
ments (and more familiar audits and reviews) do. Yet
periodic information real-time or continuous data
assurance services require adherence to key professional
historical data forward-looking data
qualities by practitioners.
cost-based information value-based information
financial information comprehensive data that
includes nonfinancial
ELEMENTS OF AN ASSURANCE
information
ENGAGEMENT static statements searchable databases
The important elements involved in assurance engage-
ment are:
• Independence Assurance services, how they are delivered, and the
• Professionalism types of information they deal with are evolving to meet
these changing needs.
• Information or context improvement
Although the needs of each decision maker are
• Decision makers unique, in research done by the Special Committee on
Assurance Services, decision makers expressed keen inter-
The CPA should be independent in order to provide
est in better information about topics such as:
an assurance service; that is, he or she should have no
vested interest in the information reported on. The CPA’s • Business risks
only interest should be the accuracy of the information,
• Product quality
not whether the information portrays results favorable or
unfavorable to either the entity that prepares the informa- • Performance measures
tion or the one that uses it. • Quality of processes and systems
An assurance service is a professional service, mean- • Strategic plan execution
ing it draws on the CPA’s experience, expertise, and judg-
• Government performance
ment. It is based on the skills brought to bear in more
traditional services, such as measurement, analysis, test-
ing, and reporting. TYPES OF ASSURANCE SERVICES
Information in an assurance service can be financial The Special Committee on Assurance Services identified
or nonfinancial, historical or forward-looking, discrete hundreds of assurance services that CPAs provide. It also
data or information about systems, internal or external to identified several services that it believed would be of par-
the decision maker. The information’s context relates to ticular appeal to decision makers in the near future. They
how it is presented. An assurance service improves the included the following.
information or its context by providing assurance about
its reliability, increasing its relevance, or making it easier Comprehensive risk assessments. The CPA identifies and
to use and understand. assesses the various risks facing an organization, such as
Decision makers are the users of the information and the operating environment, operating systems, or infor-
immediate beneficiaries of the assurance service. They mation systems. The risks might be internal, external, or
might be internal to an entity, such as the board of direc- regulatory. The CPA can help prioritize the risks and
tors, or a trading partner, such as a creditor or customer. assess the entity’s efforts to control or mitigate risks faced.
The goal of an assurance service is to improve the infor-
mation or its context so that decision makers can make Business performance measurement. Many organiza-
more informed—presumably better—decisions. The deci- tions use, or should use, data to run their businesses other
sion maker need not be the party engaging the CPA or than that emanating from the financial reporting system.
paying for the service. The service deals with identifying or providing explicit

38 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION