There’s assurance, and then there’s assurance that adds real value.
What on Earth do I mean?
When the CPA firm certifies that the financial statements are free from material error or omission, it is providing assurance on the past.
Similarly, when internal audit tests a sample (even when it is as high as 100%) of the population of transactions, they are providing assurance on the past.
There’s value in that.
But that value is limited.
What adds real value is assurance that is forward-looking.
Unfortunately, this is a concept that didn’t make the transition from the Core Principles for Internal Audit to the Global Internal Audit Standards (GIAS). One of the Core Principles was:
Is insightful, proactive, and future-focused.
Management and the board need assurance that their organization, systems, processes, and controls will help them achieve their objectives going forward.
The value of assurance on what was done in the past is limited. It’s literally in the past. We need to focus and provide assurance on the management of the risks and opportunities of today and tomorrow.
Sometimes what happened in the past is an indicator, no more, of what is likely to happen in the future.
But we are not living in a static world. Tomorrow’s world may not be the same as last year’s.
We need to know more.
We need…
