Investigative services are not assurance within the meaning of the Assurance Framework and should not result in provision of a formal assurance conclusion in accordance with assurance standards.
These services often involve the practitioner obtaining specified information, sometimes from an organisation which may not be a party to the terms of the engagement, or providing facts and information the practitioners have identified during their engagement.
While the report may not have a conclusion, it will describe the objective and results of the work and clearly state that the procedures do not constitute an assurance engagement. It will also reiterate that the report conveys no assurance.
Typical examples of such work might include:
- Forensic reports: engagements to testify or establish facts and evidence to be presented in legal proceedings regarding accounting, auditing, taxation or other related matters.
- Due diligence: engagements to probe into the detail of financial results and sometimes of operational activities of a company that is, for example, a target for acquisition.
The reports are factually based. There are many other examples of investigative services a practitioner might deliver. While typically the deliverables from such engagements do not include an assurance conclusion as defined previously (and the report will state this explicitly), it is usual for the reports to include professional views.
In specific circumstances, investigative or other services can give rise to the request for provision of a formal assurance conclusion on a specific piece of information. This would be treated as a separate assurance engagement subject to applicable assurance standards and a separate engagement letter to minimise any expectation gap arising.
Investigative services have a fundamentally different character from most assurance engagements. In the case of acquisition due diligence, for example, the objective of the investigating accountant will be to provide commentary on the information and explanations that the vendor/target is prepared to provide, with a view to assisting the acquirer itself to understand and analyse the information.
There is (in theory) no minimum or maximum level of work that may be agreed. The scope will be a matter of negotiation according to the areas of focus and interests of the acquirer, and the amount of work to be performed will be determined primarily by the nature and extent of the information available, the time available for the investigating accountant to perform the work, and (crucially) what the acquirer is prepared to pay.
The investigating accountant does not undertake any verification of the information and accordingly does not provide any comfort over the completeness, accuracy or reliability of the information. The work is not designed to, and does not, enhance the degree of confidence of the acquirer concerning the measurement of any underlying information against specified criteria. When the findings of the work are presented to the acquirer, the information provided by the vendor/target has the same status and is subject to the same limitations as before the work was undertaken (that is, if, for example, it is unaudited, it remains unaudited).
In the case of forensic investigations, those charged with governance and management are aware that there may be errors in the entity’s information and may therefore be unable to make reliable representations to the practitioner about the subject matter.
ICAEW's assurance resource
This page is part of ICAEW’s online assurance resource, which replaces the Assurance Sourcebook.