Assurance Services

Assurance services encompass a broad range of independent professional services designed to enhance the quality or relevance of information for decision-makers. These services can apply to both financial and nonfinancial information. The primary goal of assurance is to provide credibility to the subject matter, helping users make informed decisions. Examples include cybersecurity assessments and evaluations of investment policies.

Key Characteristics:

- Broad applicability to various types of information.

- Performed by independent CPAs to enhance decision-making reliability.

Attestation Services

Attestation services are a subset of assurance services where CPAs evaluate and report on specific assertions made by another party. For example, CPAs may attest to the accuracy of financial projections or the effectiveness of internal controls. Financial statement audits are a common type of attestation service.

Distinct Features:

- Focus on assertions by a responsible party (e.g., management).

- Includes audits, reviews, agreed-upon procedures, and compliance engagements.

Financial Statement Auditing

Financial statement audits represent a narrower subset of attestation services. Audits provide a high level of assurance on whether financial statements are presented fairly in all material respects according to Generally Accepted Accounting Principles (GAAP). Auditors gather evidence to substantiate their opinion, making financial statements more reliable for external users like investors and creditors.

Comparison:

1. Scope: Assurance services are the broadest, followed by attestation services, with financial statement audits being the most specific.

2. Nature of Engagement:

    - Assurance services may involve a variety of information and contexts.

    - Attestation services focus on specific assertions.

    - Auditing strictly addresses the fairness of financial statements.

3. Standards Applied:

    - Audits adhere to stringent standards (e.g., GAAS).

    - Attestation and assurance engagements may follow standards suited to their scope (e.g., AT-C, ISAE standards).