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What Are Assurance Services in Accounting?

Honesty, objectivity and adherence to professional standards are part of assurance services

The Oscars are a famous example of assurance services in the accounting field. The Academy of Motion Picture Arts and Sciences retains an accounting firm to count ballots and deliver verified results. Honesty, objectivity and adherence to professional standards are at the core of the accounting profession. With the high-stakes Oscars, the Academy relies on accountants to tabulate results that can be trusted.

Of course, it is not every day that accountants get to walk the red carpet. But assurance services are in high-demand across diverse industries, in part because of increasing regulatory requirements.

Texas A&M University-Corpus Christi (TAMUCC) offers an online MBA in accounting that includes advanced studies in auditing and assurance services. Relevant topics include fraud auditing, operational auditing, assurance services for information technology and e-commerce, auditor ethics, legal liability, risk assessment, and audit technology issues.

What Do Assurance Services Professionals Do?

When it comes to accounting careers, tax services readily come to mind. But an MBA in accounting can open the doors to many other options, including assurance services.

The American Institute of Certified Public Accountants (AICPA) explains, "Users of business information rely on companies to communicate relevant financial and nonfinancial information." However, as the AICPA points out, information alone is not enough. "Decision-makers using that information must have confidence that it is reliable." Credibility is essential.

This is where assurance services come in. According to the AICPA, "In an assurance service, an outside professional applies procedures designed to probe the credibility of the information and reports on the results."

Who uses assurance services? Here are just a few examples:

  • Lenders are naturally concerned with a customer's ability to repay a loan. Assurance services may be provided to assess and reduce risk to help the lender make the right decision.
  • In the world of information technology (IT), assurance services include assisting clients in complying with requirements related to the privacy and protection of data.
  • Nonprofit organizations might employ independent assurance professionals to verify financial records, such as with grant requirements. This may increase both donor confidence and support.

Objectivity is an essential element of assurance services. It makes sense, then, that credibility may increase when an independent third party provides assurance services. An assurance professional should not, for example, have a financial interest in the assurance client. This could undermine the level of trust and confidence in the services provided.

In addition to objectivity, the AICPA lists the following must-haves for providers of assurance services:

  • Strong analytical skills.
  • Experience in measuring various subject matters against criteria.
  • Processes for testing the reliability of data.
  • Clarity in reporting the results.

In the case of the Oscars, it turns out that there is much more to counting the votes than a simple tally. For starters, it involves ensuring that each ballot, or piece of information, is valid. Complex security measures build additional layers of trust and credibility to increase confidence in the results.

From deciding Oscar winners to strengthening sustainability initiatives, there are almost limitless applications of assurance services. Whatever the subject area, finance professionals who enjoy questioning the obvious and looking deeper than the numbers and historical data may find satisfaction in an assurance services career.

Learn more about the TAMUCC online MBA with a Concentration in Accounting.


Sources:

AICPA: Assurance Services: A White Paper for Providers and Users of Business Information

Investopedia: Assurance Services

Houston Chronicle: What Are Assurance Services That CPA Firms Provide?

ABC News: How the Academy Awards Voting Process Works in 7 Steps

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