At a Glance
Main Takeaway
Assurance services are essential to a business’s financial performance and success and are especially needed for reporting purposes. They ensure that financial information is accurate, reliable, and meets compliance with US GAAP or other financial reporting framework. A qualified third party, typically a public accounting firm or CPA, carries out assurance services to issue an opinion on an organization’s financial statements.
Next Step
Explore types of assurance services, why they are vital to certain businesses, and how Windes’ Audit & Assurance services can help your business simplify financial reporting.
What are Assurance Services?
Assurance services are professional services that provide independent assurance of the quality of your business’s information. These services include financial statement audits, reviews, compilations, and other assurance and consultative services, such as employee benefit plan audits or contractual reviews.
Types of Assurance Services
There are many types of assurance services that your business can use to validate its financial performance. CPAs issue three levels of assurance for business performance.
Compilations
The lowest level of assurance is a compilation. During a compilation, a CPA uses financial statement information the business provides to create financial statements compliant with US GAAP (or other framework). This level does not assure that financials are free from error or conform to US GAAP guidelines. They offer no assurance that what was compiled is valid through testing procedures.
Reviews
Reviews offer limited assurance that financial statements align with US GAAP. For a review, the CPA looks over provided materials, identifies gaps or trends for your business, and asks about your policies and procedures. A CPA will perform analytical tests to note trends from period to period. However, they do not evaluate whether internal controls are effective or verify whether the provided information is valid.
Audits
Audits provide reasonable assurance that a business’s financial statements conform with US GAAP and are free from material misstatement. During an audit, a public accounting firm performs in-depth verification procedures, including obtaining third-party and other evidence to support transactions and amounts. They look at your internal control systems, identify risk areas, and recommend improvements.
Other generic types of assurance and attest services include:
- Compliance audits and examinations
- Contract reviews
- Employee benefit plan audits
- Reporting on internal controls
- Agreed-upon procedures and direct examinations
- Reporting on forecasts, projections, and pro forma financial information
- Due diligence engagements
Why Assurance Services Are Essential for Businesses
The main goal of assurance services is to ensure that your company’s financial information is accurate, reliable, and in compliance with US GAAP. Most companies request audits or reviews as part of a loan or contractual obligation to support performance metrics. The performance metrics within the contract stipulate the information must come from an independent CPA firm and typically state the level of assurance required under the contract as part of the agreement.
A prime example of a performance metric under a contract is the debt service cost ratio as part of HUD loans received by real estate companies. These real estate companies usually need to prove they can service the debt provided to them by the FHA by providing a calculation supported by audited financial statements.
Assurance services from a public accounting firm like Windes are essential because they often uncover underlying compliance issues. For example, non-compliance on an ERISA or 401k audit can result in civil penalties and further legal problems. Alternatively, operational errors can lead to financial non-compliance issues, resulting in costly fines or operational loss in revenue.
Assurance services help eliminate these risks and keep your company on track with compliance and reporting.
Ensure Compliance with Windes
Windes offers a range of assurance services for private businesses. Our experts use a personalized approach to helping you address your assurance needs, including broad industry expertise and an experienced financial audit staff to ensure compliance each year.
Contact Windes today to discuss our assurance services and how you can use our professional experience to benefit your business.
Windes complete list of assurance and attest services:
- Agreed-Upon Procedures
- Audit Committee Advisory Services
- Audits, Reviews & Compilations
- Business Advisory Services (Governance, Risk & Compliance, Financial & Operational Improvement, Strategic Services)
- Contract reviews
- Due Diligence
- ERISA Audits (Employee Benefit Plan Audits)
- Examination Services
- Financial Consulting & Structure
- Internal Control Evaluation
- Nonprofit Compliance Audits
- OMB Uniform Guidance Compliance Audits (formerly A-133 Compliance)
- Special Reports