The preparation and verification of financial statements of a business entity involve a series of procedures and methods. Auditing, investigating, and verifying financial statements are methods adopted to ensure that the financial information presents a true and fair view of an entity’s financial performance.
The process of audit is significant for any business entity to publicly report its financial statements. Therefore, independent third-party auditors are hired to perform the audit of companies. The whole process of audit involves several procedures and engagements. Vouching, verification, investigation, etc., are the most commonly adopted procedures throughout the process of audit.
Assurance service is all about the independent examination of subject matter by independent practitioners. The external audit is also a type of assurance service, and we will be talking about assurance in the context of an audit.
The Assurance engagement is undertaken by the professional audit staff to get sufficient and appropriate evidence to express a conclusion about the accuracy and reliability of a document/statement. The purpose of an assurance engagement is to enhance the degree of confidence of the intended users about the measurement outcome (financial data & information).
Independent audit companies hire different staff members to perform the tasks related to the audit. Although the report about audited documents is finalized by an independent certified auditor, different associates and assistants work with the auditor. Assurance associates are the professionals in the team of client-facing teams of audit firms. This article will discuss an assurance associate’s role, responsibilities, and qualifications.
So let’s get into it.
What Is An Assurance Associate?
An assurance associate can be defined as,
An assurance associate is a professional responsible for performing the assurance engagement on behalf of an auditor hired by business entities. An assurance associate is a sub-ordinate to the auditor and requires to have close attention to details. The role of the assurance associate is prominent in reviewing the work of accountants & internal auditors and making sure that all the accounting principles and regulations have been honored in the preparation of statements.
Types of Assurance Engagement
An assurance associate will be required to perform different assurance engagements necessary to give a professional judgment about the accuracy of the financial statements and documents. The most common types of the assurance engagements are as follows:
Reasonable Assurance Engagement
Reasonable assurance engagement focuses on gathering sufficient and appropriate information & evidence to draw conclusions about the subject matter(document, financial statement, etc.). The conclusion of reasonable assurance is generally a positive report enhancing the reliability of the subject matter. However, the risks involved in this type of assurance are also high.
It’s a time-taking assurance procedure and requires strict compliance with principles and regulations. An external audit in the form of reasonable assurance is performed by the auditors.
Limited Assurance Engagement
Limited assurance engagement is also gathering sufficient and appropriate evidence to draw a conclusion about a subject matter. However, the strictness and regulations followed in the limited assurance engagement are lower than the reasonable assurance. The outcome of the limited assurance engagement is a provision of a written report. The limited assurance reports are negatively worded and present a low level of assurance.
Audit Vs. Assurance
The audit is the process of assessing and examining the economic events & transactions recorded as accounting entries in the financial statements of a business entity. The accuracy of financial reports is evaluated, and it’s ensured that the financial statements meet the accounting principles and are presented ethically & fairly. The external audit is performed by hiring independent auditors. The internal auditor can perform the internal audit to check the accuracy of the financial statements.
On the other hand, assurance is a process used to analyze and evaluate an entity’s accounting entries and transactions. It’s the process of verification to ensure that accounting principles and standards are met for recognizing and recording a financial transaction in accounting books. The accuracy of recording the transactions is also evaluated in the assurance engagement.
How To Become An Assurance Associate: Qualifications
Now let’s come to what you need to become an assurance associate.
Education is the first prerequisite if you want to work in any industry. You will need to hold a bachelor’s degree in accounting or a relevant field to pursue a career as an assurance associate. However, the concrete degree and requirements are determined by the recruiting company. In some cases, partial certification of ACCA is also required for a person to work as an assurance associate.
In most cases, the fresh graduates are hired as the assurance associates of the auditors. On-job training is provided to the newly hired associates. It includes developing know-how and understanding of the policies and procedures, software, etc. As they continue to work in the industry, opportunities to gain experience and professional networking come their way.
Certification & License
In most cases, certifications and licenses are not required by an individual to start working as an assurance associate. However, in some firms, individuals with partial certification of ACCA or CA are recommended for the role. Therefore, you can opt to get certification before starting working or get the certification during a job.
Duties of An Insurance Associate
Let’s talk about the detailed duties and responsibilities of an assurance associate.
An assurance associate has to perform the following duties:
- Determining if the financial reporting of a business entity is accurate and has met legal requirements by performing audits of the financial statements
- Audit plan development and reviewing audit plans developed by others to decide if the proposed plan is cost-effective and sufficient to meet the objectives of an audit
- Preparation of reports to summarize and conclude the audit findings.
- Recommendations to take corrective actions for addressing issues as identified in the audit
- Preparation of tax returns for individuals and businesses by ensuring that tax regulations and rules are met and applied to the circumstances of the clients
- Detailed reports preparation to document the results of an audit and recommendations to enhance the internal controls and compliance.
- Assurance associates have to conduct forensic audits for the identification of frauds, embezzlements, and unlawful activities
- Understanding the circumstances of an organization and interpreting the accounting principles in the context of the financial activities
Skills Of An Insurance Associate
As we mentioned earlier, an assurance associate job is more focused on skills than the educational background. Let’s talk about the skills assurance associates must possess to become successful.
Attention To Detail
Throughout the role and duties of an assurance associate, attention to detail is a prerequisite. It’s the ability to notice every small change or variation in different circumstances. For instance, when a client asks about their accounts, the associate must be able to locate and report the correct information. If assurance associates lack attention to detail, it will hurt the accuracy of the assessments and evaluations.
Technical Know-How of Industry
Having technical knowledge about accounting principles is also necessary for assurance associates. Besides, the technical knowledge of software, data security, and relevant subjects is a must-have for assurance associates.
Communication skills are also necessary for assurance associates like any other professional. An assurance associate spends most of the time communicating with people(employees of the client) to evaluate the financial data. Besides, they have to correspond with clients on the phone, by email, in person, etc. Therefore, having good communication skills is necessary for an assurance associate.
Problem-solving skills are also necessary for an assurance associate as identification and resolution of inaccuracy in the financial reports are required during the process. Identification of the risk and developing strategies to prevent them is also the call of duty for an assurance agent. Therefore, having in-place problem-solving skills always helps.
Salary of Assurance Associates
According to the data of Glassdoor, assurance associates have a median salary of around $73,759 per year. The base pay is around $57,547 per year, with additional pay of $16,232 per year.
We have discussed the role, duties, and skills required to become a successful assurance associate or agent. You can pursue a career as an assurance associate and excel in the field by getting certifications and licenses along the way. The assurance associates can improve their professional level by getting ACCA, CA, or CPA certification.