In our article in last month’s newsletter, “Audit, assurance or something in between?”, we presented an overview of the advantages of hiring assurance service providers, particularly accountants in Sydney. We outlined the benefits of engaging an assurance service provider and how their services help deliver value to your business, stakeholders and other key relationships and objectives.
Continuing this series of articles, we will provide details of the different types of services on offer at S&W, their benefits, and, notably, the value S&W feel these can bring you. These are summarised broadly as follows:
This month we provide an outline of the “other” assurance-related services which are not necessarily driven by legislative needs but more geared to help organisations meet their internal objectives.
Other assurance-related services may broadly be categorised as follows:
- Agreed-upon procedures
- Internal Audit
Agreed upon procedures
The nature and benefits of Agreed procedures are often not fully understood. Yet, it is one of the more bespoke services that enable an organisation to target areas of their business and better understand areas for improvement, investment, or expected results.
As the name suggests, Agreed procedures are specific tests to be undertaken by your assurance advisor as agreed with you or the intended user. These procedures are not designed to support an opinion but to provide factual findings to the end user.
An agreed-upon procedures engagement provides additional reliable data that specific matters have been performed/addressed.
Examples of when this type of engagement may be beneficial include:
- for funding or grant providers, as it can target the area that they are interested in (eg that a grant was received and banked by the organisation and that specific terms of using the grant were followed);
- for checking a specific system or process is operating as expected (e.g. stock count procedure at year-end; or the payroll process from timesheet through to wage payment is occurring in line with documented procedures and controls).
Another more comprehensive example of an agreed-upon procedures service is performing due diligence, which is often an engagement when one business acquires another, and the acquirer wishes to gain comfort over the financial, legal and overall business attributes of the target entity.
An agreed-upon procedures engagement usually results in a report of factual findings being presented by the assurance practitioner to you or the end user explaining the outcome of the procedures undertaken and, where appropriate, comparisons to what was initially expected.
Notably, the end-user of the report then forms their own conclusions from the procedures performed and the findings reported.
A compilation service is when the accounting professional compiles financial information from underlying records—for example, preparing financial statements based on the underlying books and records per a set of accounting and/or legislative standards.
There are varying degrees with which such compilation can be performed, and with advances, such information can often be automatically obtained from software such as Xero or MYOB.
However, when relying on such information, care should be taken if a suitably qualified professional has not prepared it.
A compilation by an assurance practitioner and qualified accountant comforts the end user that the preparation of the information and work carried out has been with professional competence and due care because of the ethical and professional standards the practitioner has had to apply in delivering the service.
The end product of a compilation engagement is a report that the practitioner has compiled the information but that the procedures do not include verification or validation procedures and that no assurance is expressed. The compiled information will be attached to the report.
Next month’s article will delve deeper into the benefits of due diligence and internal audit as part of the umbrella of other assurance services provided by S&W.
Kreston Stanley Williamson Team
*Correct as of April 2018
Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.