Audit and assurance services are professional services that involve the independent evaluation of an organisation’s financial and operational information. An audit provides a formal opinion on whether financial statements are accurate and comply with accounting standards. Assurance services go beyond financial audits to provide confidence in other aspects of a business, such as internal controls, risk management and compliance with regulatory requirements.
A common example of an assurance service is a review engagement. In this type of engagement an accountant performs limited procedures to assess whether a company’s financial statements are plausible. While it does not provide the same level of assurance as a full audit it still offers stakeholders some level of confidence in the financial reports. Other examples include risk assessments, internal control reviews and due diligence for mergers and acquisitions.
Â
Audit services may be required for a range of organisations including:
- Companies regulated by ASIC
- Not-for-profit organisations and charities
- Clubs and associations with statutory reporting obligations
- Incorporated associations
- Trusts and SMSFs
- Public companies and large proprietary companies
In many cases an audit is a legal requirement. However some privately held businesses also choose to undergo regular audits to improve transparency and enhance their credibility with lenders and investors.
Audit and assurance services offer numerous benefits including:
- Improved accuracy and integrity of financial information
- Enhanced trust from stakeholders such as investors, banks and regulators
- Identification of weaknesses in internal controls or business processes
- Early detection of financial irregularities or risks
- Greater compliance with laws and reporting obligations
- Informed decision-making based on reliable data
Regular audits can help position a business for long-term success by strengthening governance and accountability.
Audit services are a specific type of assurance engagement that result in a formal opinion on financial statements. They involve a detailed examination of a company’s accounting records to ensure compliance with relevant standards.
Assurance services on the other hand encompass a broader category of engagements that assess the reliability of information beyond financial reporting. These may include operational reviews, compliance audits or sustainability reporting. All audits are assurance services but not all assurance services are audits.
