Negative assurance definition
/What is Negative Assurance?
Negative assurance is a statement by a CPA that no adverse issues have been found regarding the accuracy of a client's financial statements. This approach is usually taken in order to confirm that the CPA has found no evidence of fraud, or evidence that any required accounting practices were breached. This assurance is most commonly given in the following two situations:
When the CPA is asked to render an opinion regarding financial statements that have already received an auditor’s opinion, usually in an earlier period.
Negative assurance is also given when the CPA is asked to render an opinion regarding financial information being relied upon as part of the issuance of securities.
Negative assurance is only permissible when the CPA directly gathers audit evidence, rather than relying upon evidence gathered by a third party. The audit procedures used as the basis for a negative assurance statement are not as robust as what would be required for the more common positive assurance statement.
Negative assurance is only used when it is not possible to obtain positive assurance, which requires the collection of specific proof that an entity’s financial statements portray an accurate picture of its financial results, financial position, and cash flows.