Assurance is provided to give its recipients ‘piece of mind’. There are different types of assurance reports, they can be for internal and external use, the reports provide confidence to stakeholders in regards to the systems and processes your business has in place. These reports highlight how risks are being managed and steps to take to mitigate them, as well as providing ‘good practice’ recommendations. The accountants providing you with the report will take different factors into consideration depending on the subject matter and criteria of the report. Assurance reports broadly cover the following:
Assurance reports that also take external factors into consideration will look at:
Trustees, directors, divisional managers and partners will find the report useful, and are likely to make changes suggested in the report. The report will give external stakeholders such as pension scheme members, external auditors and shareholders a greater peace of mind that there has been an independent review of the processes, controls and information being used.
Assurance reports provide peace of mind stakeholders. As the reports are compiled by third parties (usually ICAEW registered audit firms) stakeholders have peace of mind that the information provided to them is objective, unbiased and reliable.
The report and its findings add credibility to the businesses systems and processes. ‘Recommendations’ in the form of process improvements are also usually made in the report, businesses can use this information to prove they are working to improve processes and reduce business risks. The report will also help you prepare for ‘worst case’ scenarios and implement processes that will carry your business through economic turbulence.
The Assurance report can also have a positive impact on long-term profitability as the better controls and governance put in place as a result of the report’s findings will reduce the chance of errors, which in turn save time and money that would otherwise be spent to rectify them.
Assurance reports require certain processes to be documented. Undocumented processes can make it difficult to know what to do in certain situations, documenting them also ensures ‘knowledge’ is not lost if someone leaves. The documented guidance for process ensures information sharing, consistency and provides more confidence in internal controls.
An assurance report can also help businesses draw a more valid conclusion from their year-end accounts as the assurance report will highlight key areas of improvement.