Negative Assurance

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What is negative insurance

Negative assurance is a representation by an auditor that particular facts are believed to be correct since no contrary evidence has been found. Negative assurance is normally used by auditors in situations where it may not be possible to positively confirm the accuracy of the financial reports.

FAILURE Negative Insurance

Positive assurance of accuracy is considered stronger and means that the auditor has done enough work to state that the financial statements of a business give an accurate picture of its true financial situation. Positive assurance is required for certain audited financial reports published by public companies. Since the full audit of a public enterprise in accordance with generally accepted accounting principles is a large-scale enterprise, positive assurance is normally only issued when required by law.

Negative assurance is most often issued when an accountant is asked to review certified financial statements prepared by another accountant. In this case, since another accountant has already certified the accuracy of the statements, negative assurance is often considered sufficient to confirm that the statements are free from material misstatement. Negative assurance opinions are also issued when an accountant is asked to review the statements associated with the issuance of securities.

To issue a negative assurance opinion, the accountant must directly gather convincing elements and cannot rely on indirect elements, that is to say elements supplied by a third party. The procedures used to prepare a negative assurance opinion are not as strict as those required for a positive assurance opinion.

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