Assurance service is an independent professional service, typically provided by CPAs, with the

goal of improving the information or the context of the information so that decision makers can
make more informed, and presumably better decisions. Assurance services are provide
independent and professional opinions that reduce the information risk; risk that the information
provided is incorrect.[1]

[edit] Types of assurance service

Audits can be considered a type of assurance service. However audits are only designed to test
the validity of the financial statements. Under an assurance engagement, accountants can provide
a variety of services ranging from information systems security reviews to customer satisfaction
surveys. Unlike audit and attestation services that are often highly structured, assurance services
tend to be customized and implemented when performed for a smaller group of decision makers
within the firm. Often managers must make decisions on things they have incomplete or
inaccurate data for, and decisions made on such data may be incorrect and increase the overall
business risk. In this respect, assurance services can be very helpful in reducing such risk and
help managers or decision makers make more confident decisions within a given firm. This is
similar to audits in that investors will choose to invest in a firm that is publishing financial
statements that have been audited by an independent firm.

Assurance services can test financial and non-financial information; due to this assurance
services can be classified as consulting services. However, assurance services are not considered
consulting[citation needed] because in consulting services generally, an accountant uses their
professional knowledge to make recommendations for a future event or a procedure, such as the
design of an information system or accounting control system. In contrast, assurance services are
designed to test the validity of past data of the business cycles. Although there is no boundary to
what an accountant can test in assurance services, an accountant will not likely[vague] accept an
assurance engagement in which his firm or previous experiences does not provide them with
enough expertise to make a professional opinion on the given data.

Accounting attestation standards define the basic standards for representing attestation
engagements. Attestation is defined as an engagement in which a practitioner is hired to issue
written communication that expresses a conclusion about the reliability of written assertions
prepared by a separate party. The American Institute of Certified Public Accountants identified a
number of different engagements that fall under the scope of attestation standards, including:
examining financial forecasts and projections, examining pro forma financial statements,
evaluating internal control, assessing compliance with rules, regulations, and contractual
obligations, as well as evaluating management discussions and analysis of financial results[1].
The formation of attestation standards was an early[when?] attempt to not only provide guidance for
engagement practices, but also aid the expansion of assurance services provided by accountants
and other related professionals.

Attestation standards have a lot of information in common with generally accepted auditing
standards (GAAS), but in general, auditing standards are much lengthier and comprehensive.

Audits are performed to ascertain the validity and reliability of information; also to provide an
assessment of a system's internal control. The goal of an audit is to express an opinion on the
person / organization / system (etc) in question, under evaluation based on work done on a test
basis. Due to practical constraints, an audit seeks to provide only reasonable assurance that the
statements are free from material error. Hence, statistical sampling is often adopted in audits. In
the case of financial audits, a set of financial statements are said to be true and fair when they are
free of material misstatements - a concept influenced by both quantitative and qualitative factors.

Audit is a vital part of accounting. Traditionally, audits were mainly associated with gaining
information about financial systems and the financial records of a company or a business (see
financial audit). However, recent auditing has begun to include other information about the
system, such as information about security risks, information systems performance (beyond
financial systems), and environmental performance. As a result, there are now professions
conducting security audits, IS audits, and environmental audits.

In financial accounting, an audit is an independent assessment of the fairness by which a

company's financial statements are presented by its management. It is performed by competent,
independent and objective person(s) known as auditors or accountants, who then issue an
auditor's report based on the results of the audit.

In Cost Accounting, it is a process for verifying the cost of manufacture or production of any
article, on the basis of accounts as regards utilisation of material or labour or other items of costs,
maintained by the company. In simple words the term cost audit means a systematic and accurate
verification of the cost accounts and records and checking of adherence to the objectives of the
cost accounting.

As per ICWA London’ “cost audit is the verification of the correctness of cost accounts and of
the adherence to the cost accounting plan.”

Such systems must adhere to generally accepted standards set by governing bodies regulating
businesses; these standards simply provide assurance for third parties or external users that such
statements present a company's financial condition and results of operations "fairly."
The Definition for Auditing and Assurance Standard (AAS) 1 by ICAI "Auditing is the
independent examination of financial information of any entity, whether profit oriented or not,
and irrespective of its size or legal form, when such an examination is conducted with a view to
expressing an opinion thereon."