Academic journal article Auditing: A Journal of Practice & Theory

An Investigation of Alternative Report Formats for Communicating Moderate Levels of Assurances

Academic journal article Auditing: A Journal of Practice & Theory

An Investigation of Alternative Report Formats for Communicating Moderate Levels of Assurances

Article excerpt

A key issue associated with the expansion of assurance services beyond the traditional financial statement audit is the difficulty associated with communicating a desired level of assurance. The International Federation of Accountants (IFAC) commissioned a research study to examine the communication of a "moderate" level of assurance. With the exception of the United States where attestation standards provide explicit guidance and prescribe the use of negative assurance for review reports, there is little or no guidance available as to the appropriate report formats for such engagements. By examining assurance reports submitted to IFAC as examples of communicating a moderate level of assurance for environmental and sustainability assurance engagements, four major reporting formats for communicating the conclusions were identified. These included an opinion on procedures (similar to an agreed-upon procedures engagement report but containing an opinion); negative assurance (nothing has come to the assurance provider's attention); positive assurance (similar in format to an audit report); and positive assurance with a limitations paragraph (describing inherent limitations in the subject matter). This study examined the level of assurance offered by these four report formats as well as a fifth report format that communicated a high level of assurance (positive opinion, work effort consistent with that undertaken for providing high assurance).

Seven hundred ninety-two members of the Australian Shareholders' Association each examined two randomly selected reporting formats (from the five reported above) and answered questions about the level of assurance perceived in each report. …

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