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Adds credibility
Definition of assurance
Assurance means confidence. In an assurance agreement, an assurance firm is engaged by one party to give an opinion on a piece of information that has been prepared by another party. The opinion is an expression of assurance about the information that has been reviewed.
Definition of assurance
It gives assurance to the party that hired the assurance firm that the information can be relied on. It gives assurance to the party that hired the assurance firm that the information can be relied on.
Definition of assurance
Assurance can be provided by:
audit: this may be external audit, internal audit or a combination of the two review
Levels of assurance
The degree of assurance that can be provided about the reliability of the financial statements of a company will depend on:
the amount of work performed in carrying out the assurance process, and the results of that work.
Levels of assurance
An audit provides a high, but not absolute, level of assurance that the audited information is free from any material misstatement. This is often referred to as reasonable assurance. A review would provide only a moderate level of assurance that the information under review is free of material of material misstatement.
Levels of assurance
The higher level of assurance provided by an audit will enhance the credibility provided by the assurance process, but the audit work is likely to be:
More time-consuming than a review, and so More costly than a review.