 In this presentation, we will take a look at a few different terms, a few different definitions, those of auditing, a test, and assurance services. As we look at these terms, we see that there's going to be some overlap between these terms. This is often the case when we think about items related to public accounting, often related to the services of public accounting. Support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. And that being the case, then we often hear different terms that are being used in different contexts in a similar way. We may start to think, well, these are the basically the same thing. And that's because of course there's some overlap, but they aren't the same thing. So what we want to do then is be able to know what that overlap is. So when we hear these terms being used in different areas, or when we use them in different areas, we use them properly. We know when we can use them in interchangeable ways. We know when we have to be more specific when we want to talk about something specifically, we know exactly how to talk to it specifically. And we know when we can basically use those interchangeable terms. So we can think about it in this way, the audit, then the auditing being most specific of these terms, fitting within the attest and the attest engagements, fitting within assurance type items. So if we consider that, then again, we could think about the audit, then being the most specific. So when we're talking about an audit, we're actually talking about a very specific thing. If we're a public accounting firm, and we're talking about an audit, we're talking about a specific thing that audit then is can be referred to as something that would be like an attest engagement. In other words, the audit is going to be a type of attest engagement, but in test engagements, attest engagements are going to be a larger type of grouping. So if we think about this, we say that, well, all audits are attest engagements, but not all attest engagements are audits. So when we think about how we're going to phrases or word things, we want to keep that in mind, all audits are a type of attest engagement, but not all attest engagements are audits. And the same goes with assurance. So we have the same type of relationship with audit and attest engagements, assurance being a broader type of category. So all attest engagements are components of assurance services. However, all assurance services are not attest engagements. And so when we start to think about, especially what the is provided by say, publicly accounting firms, what do they do, we could start to think of this hierarchy. The audit is often kind of the thing we think about first is the most prized type of thing. It's usually the most the biggest moneymaker type thing, because it takes the most work to do an audit. But that's not the only thing that is done. We might have a test engagements that are not audits. They don't have the same scope typically as audit being the most intense in scope. And we may have other assurance type services that aren't attest insurances that are done as well. So if we think about these, then we're going to say the audit, what is an audit then systematic process of obtaining and evaluating evidence related to assertions about economic conditions and events to determine the degree of correspondence between those assertions and and established criteria and communicating the results to users. So an audit that is going to be usually the most specific type of service that we're going to have when we think about audits, we're often thinking about audits of financial statements. We could do other things to financial statements, including say reviews of financial statements, possibly compilation of financial statements. But the audit is going to be the biggest or the most big moneymaker typically for a public accounting firm. It's going to be where we do the most work to see if the audit is in compliance. And what are we doing with the audit? We're doing exactly this systematic process of obtaining evaluating evidence. So we're going to look for evidence to assert about economic actions and events to determine the degree of correspondence. We're looking for the correspondence between those assertions and and established criteria. So we're in basically the established criteria is usually generally accepted accounting principles. So we're trying to say, look at the financial statements, the assertions being that the financial statements have been created in accordance with criteria that criteria generally accepted accounting principles. We're looking for evidence for that to indeed be the case or not. And once we do the audit, then we're going to communicate that information to the users of the result of the audit, the resulting of our of our audit, what we believe to be the case, we then communicate that information basically usually on the fairness of the financial statements. How about a test? What are the test actions in the test engagement? Practitioner is engaged to issue a report on subject matter or on assertions about subject matter. So now we're talking about subject matter and assertions about the subject matter that is the responsibility of another party. So notice what we're not doing as much here. We're not getting into as much of the evaluating of the evidence. So you notice the test engagements then could include auditing because we could have the evaluation auditing being a type of a test engagement. But we might do far less than that because that's not going to be a requirement of a test engagements in general. For example, we might do a review as opposed to an audit still is under this definition. Practitioner is engaged in issue a report on subject matter or on assertions about subject matter. That is the responsibility of another party still the responsibility of the another party. We're still issuing a report. However, we're not doing as much detail in terms of gathering evidence as we would in the case of an audit. And we might do that again in something like a review. How about assurance assurance service independent professional services that improve the quality of information or its context for a set of decision makers. So notice this is a broader type of definition. We're talking about assurance services in general. We're not doing the attest not necessarily restricting ourselves to send to just the attest engagements. And we're certainly not in this broad definition restricting ourselves to just audits. We have here independent professional services that improve the quality of information. So that's going to be the criteria. They improve the quality. Now does an audit improve the quality of the information? Hopefully it does because it gives an outside professional assurance that the information is indeed accurate or material materialally accurate with regards to some degree of risk with regards to the auditing risk. So that's going to be providing services that's going to improve the quality. But the audit is not the only thing that can have a service that's going to be improving the quality of information.