21 June, 2014

Quality Assurance

Is it different from insurance. After speaking to others on the web, I found the answer. Insurance and assurance are too closely related terms and some times misinterpreted as the same. In general, the term insurance refers to providing cover for an event that may happen while assurance is the provision of cover for an event that is certain to happen. 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 in 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 in 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 consultingbecause 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, a practitioner is discouraged from accepting 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.

Find out more about Risk Assurance at PwC.


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