Q16.2 Assurance and audit are not same: Is assurance the same as audit ?

kbadmin

2 years ago

Assurance and audit are not same

Assurance and audit are not same
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Assurance and audit are not same: Assurance and audit are related concepts but are not exactly the same. While audit is a specific type of assurance engagement, assurance encompasses a broader range of services.

Assurance refers to the professional services provided by auditors and assurance providers to enhance the credibility and reliability of information for the benefit of users. It involves evaluating and providing an independent opinion or conclusion on various types of information, systems, processes, or controls.

Audit, on the other hand, is a specific type of assurance engagement that focuses on the examination and evaluation of financial statements and related information. The objective of an audit is to express an opinion on whether the financial statements present a true and fair view in accordance with the applicable financial reporting framework. Audits are typically conducted by certified public accountants (CPAs) or audit firms.

While audits are a commonly known form of assurance engagement, other types of assurance services may include:

Review engagements: These involve performing limited procedures and inquiries to provide a moderate level of assurance on the financial statements.

Agreed-upon procedures engagements: These involve conducting specific procedures as agreed upon by the client and the assurance provider. The results of the procedures are reported without providing an overall opinion.

Compliance engagements: These involve assessing whether an entity is complying with specific laws, regulations, or contractual obligations.

Internal control engagements: These involve evaluating and providing assurance on the effectiveness of an entity’s internal controls over financial reporting or other areas.

Performance audits: These involve evaluating the efficiency, effectiveness, and economy of an organization’s operations, programs, or activities.

In summary, Assurance and audit are not same, while audit is a specific type of assurance engagement focused on financial statements, assurance encompasses a broader range of services that provide confidence and assurance on various types of information and processes.

FAQs:

Are assurance and audit the same thing?

No, assurance and audit are different. While audit focuses on verifying financial information, assurance provides a broader range of services, including audits, to improve the reliability of financial and non-financial data.

What is an audit?

An audit is the systematic examination of financial records to ensure accuracy, compliance, and transparency with regulatory standards.

What is assurance?

Assurance refers to a variety of services that enhance the reliability of information, including the evaluation of financial statements, internal processes, and systems.

Is audit a part of assurance?

Yes, audit is a subset of assurance services. Audits provide assurance about the fairness and accuracy of financial statements.

What is the main objective of an audit?

The primary objective of an audit is to express an opinion on whether the financial statements present a true and fair view of a company’s financial position.

What is the main objective of assurance?

Assurance aims to improve the quality and reliability of the information, ensuring that it meets the needs of its intended users.

What types of assurance services exist apart from audit?

Assurance services include risk assessments, internal control evaluations, environmental reviews, and regulatory compliance checks.

Do audits always provide full assurance?

No, audits provide reasonable assurance, not absolute assurance, as it is not possible to verify every transaction in large organizations.

Who performs assurance and audit services?

Both assurance and audit services are performed by certified professionals, such as Chartered Accountants (CAs) or Certified Public Accountants (CPAs).