Accounting Theory

Introduction 1. Definition According to Robert K. Elliot, 1997, assurance is a positive declaration that produces quality information which enhances the degree of confidence for all intended users as well as improves the quality of decision that being made. It is also part of corporate governance which provide reliable and accurate information to the stakeholders such as investors, employees, government, voluntary sector and market regulators, regarding the efficiency and effectiveness of organization’s policies, strategies and operations and compliance with the statutory obligations will be provided by the management. Due to the risk of uncertainties in the environments, stakeholders demand more from financial information to non-financial information. Not only the numerical information tell the conditions of an organization to the stakeholders, but transactions, changes in information technology, markets and risks and changes in laws and regulations are crucial to them as well.
ICAEW defined external assurance as the provision of an independent opinion by an expert (chartered accountants) on information prepared by one party for the benefit of another parties. By providing assurance on non-financial information reporting is also known as external assurance reports. Basically there is no requirement or significant demand by public or association on this external assurance. Therefore, auditors are only required to meet their responsibilities in checking the consistency and reliability of information in the reports to enhance corporate governance. In future, if there are major errors from external assurance reports which affect the perceptions of investor, this would lead to an increase in demand for external assurance and indirectly will cause strictly rules or framework to be implemented on this practices. If stakeholders were lose confidence in the quality of information, the use and value of external assurance reports might change according to that.

References: * The Impact of Reliability and Relevance of Financial Position Information on Decision Making. (n.d.). Retrieved 9 December, 2012, from http://www.eurojournals.com/REFAS_1_03.pdf * Relevance and Reliability * The use of Non-Financial Information: What Do Investors want? (2008, March 1). Retrieved 9 December, 2012, from http://www.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p118412.pdf * The Management Accountant and Non Financial Information. (n.d.). Retrieved 28 November, 2012, from http://www.nzica.com/News/Archive/2012/March/The-management-accountant-and-non-financial-information.aspx * Sustainability Reporting Guidelines * How is Sustainability Report audited? from http://www.axelspringer.de/en/artikel/Audit-by-Ernst-Young_1352036.html * Maef Woods (2003), The Global Reporting Initiative * Royal NIVRA Amsterdam (2008), A Guide to Reporting & Assurance of Non-financial Information in Public Sector * Royal NIVRA Amsterdam (2007), Assurance Engagements Relating to Sustainability Reports * Giacommo Manetti & Lucia Becatti (2008), Assurance Services for Sustainability Reports : Standards and Empirical Evidence * Ernst & Young (2011, April), Internal Audit’s Evolving Role : A Proactive Catalyst of Business Improvement * Ernst & Young, Climate Change and Sustainability : Five Highly Charged Risk Areas for Internal Audit * Deloitte (2011, July), The Role of Internal Audit in Integrated Reporting