Attestation reports: Overview, definition, and example
What are attestation reports?
Attestation reports are formal reports issued by an independent auditor or other third-party professional that evaluates and verifies certain information or claims made by a business or organization. These reports are commonly used in financial reporting, compliance assessments, and internal controls to ensure that an organization is adhering to agreed-upon standards, regulations, or contractual terms.
The purpose of an attestation report is to provide a professional, impartial assessment of the accuracy, fairness, or reliability of specific information. The auditor or attester will typically evaluate the subject matter in accordance with established criteria, and then issue a report on their findings. The most common types of attestation reports include financial statement audits, internal control assessments, and compliance reviews.
Why are attestation reports important?
Attestation reports are important because they provide stakeholders, such as investors, regulators, and business partners, with assurance that the information presented by an organization is accurate, reliable, and in compliance with applicable standards. These reports help build trust, demonstrate accountability, and ensure that businesses are adhering to legal or regulatory requirements.
For businesses, attestation reports are often necessary to meet regulatory requirements, secure financing, or maintain transparency with stakeholders. They also help identify weaknesses or areas of improvement within an organization's internal processes.
Understanding attestation reports through an example
Imagine a company, XYZ Corp., undergoes an audit as part of its annual financial reporting requirements. An independent auditor reviews XYZ Corp.'s financial statements and internal controls to ensure that the company's financial reports are accurate and compliant with Generally Accepted Accounting Principles (GAAP). The auditor then issues an attestation report, confirming that the financial statements fairly represent the company's financial position.
In another example, a business that handles sensitive customer data may be required to undergo an attestation assessment for compliance with data protection laws, such as the General Data Protection Regulation (GDPR). A third-party expert will evaluate the company's data handling practices and issue an attestation report that confirms whether the business is meeting the necessary regulatory standards.
An example of an attestation report clause
Here’s how an attestation report clause might appear in an agreement:
“The Company agrees to provide an attestation report from an independent auditor verifying the accuracy of the financial statements and confirming compliance with applicable laws and regulations. The attestation report shall be submitted to the Board of Directors within [Insert Timeframe] following the completion of the audit.”
Conclusion
Attestation reports play a crucial role in verifying the accuracy, fairness, and compliance of information presented by businesses and organizations. Whether for financial reporting, compliance, or internal controls, these reports provide valuable assurance to stakeholders and help maintain transparency and accountability. For businesses, having attestation reports can help meet regulatory requirements, improve operational practices, and build trust with investors, customers, and partners.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.