Why assurance services matter to a first-time founder
Assurance services increase users’ confidence in information by having an independent professional check it against suitable criteria, meaning agreed rules or measures. An audit is one form, but assurance can also cover business controls, sustainability information or another clearly defined subject. How much confidence the work provides and what it covers depend on the engagement and applicable professional standards.
Examples of assurance services
An investor asks a company for assurance over a schedule of recurring revenue. A qualified professional agrees how the figures will be judged, tests relevant evidence and issues a limited-assurance conclusion. Limited assurance uses less extensive work and gives less confidence than the reasonable assurance provided by a financial-statement audit.
Common misunderstanding
Assurance is not a guarantee that information is perfectly accurate or that fraud cannot exist. A review or limited-assurance engagement involves less work and provides less confidence than a reasonable-assurance audit, which reduces risk to a low level but not to zero. Consulting or preparing information is also not automatically assurance, particularly where the professional must be independent.
When to use it
Use assurance when investors, lenders, regulators or customers need greater confidence in important information. Before work begins, define who will use the report, what information will be checked, the rules or measures used, the level of confidence sought and the report to be issued. Confirm that the professional is qualified and independent where the applicable rules require it.