Difference between assurance and audit, Assurance and audit are related concepts, but they have distinct differences. Here are the key differences.
Scope:
Assurance is a broader concept that encompasses various services provided to enhance the credibility and reliability of information. It includes not only financial information but also non-financial information. Audit, on the other hand, is a specific type of assurance engagement that focuses on the examination of financial statements.
Objective:
The objective of assurance engagements is to provide an independent and objective assessment of information or systems, aiming to enhance the confidence of users in the reliability and relevance of that information. Audit specifically focuses on expressing an opinion on the fairness and accuracy of financial statements.
Professional Standards:
Both assurance and audit engagements are guided by professional standards. However, audit engagements have a specific set of standards called Generally Accepted Auditing Standards (GAAS) or International Standards on Auditing (ISA) that provide detailed guidance on how to plan, perform, and report on an audit. Assurance engagements may follow different standards depending on the nature and scope of the engagement.
Reporting:
In an assurance engagement, the assurance provider issues a report expressing a conclusion or opinion on the subject matter. The report may vary depending on the nature of the assurance engagement, such as an examination report, review report, or agreed-upon procedures report. In an audit, the auditor issues an audit report that includes an opinion on the financial statements.
Level of Assurance:
Audit engagements typically provide the highest level of assurance, which is reasonable assurance. This means that the auditor provides a high but not absolute level of assurance that the financial statements are free from material misstatements. Other assurance engagements may provide different levels of assurance, such as limited assurance or moderate assurance, depending on the specific engagement and the procedures performed.
Overall, audit is a specific type of assurance engagement that focuses on the examination of financial statements and provides reasonable assurance on their fairness and accuracy. Assurance engagements, on the other hand, can cover a wider range of subject matters and may provide different levels of assurance based on the nature and scope of the engagement.
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