Negative Assurance
Barron's Accounting Dictionary:
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Negative Assurance
Method used by the certified public accountant to assure various parties, such as bankers and stockbrokers, that financial data under review by them is correct. Negative assurance tells the data user that nothing has come to the CPA's attention of an adverse nature or character regarding the financial data reviewed. This type of assurance is normally given to investment bankers and the SEC when the financial data are being used for stock and bond issuance. In addition, this assurance is given whenever a CPA is asked to comment on financial statements upon which a previous audit opinion has been rendered. (This type of assurance is unacceptable for the basic financial statements on which a certifying audit has been performed.) Further, negative assurance comments are made on unaudited financial statements and subsequent changes, indicating that nothing came to the auditor's attention that suggests the statements do not comply with applicable accounting requirements; are not fairly presented in conformity with gaap applied on a consistent basis; or do not fairly present information shown therein. Negative assurance is given because the auditor has not made an examination in conformity with GENERALLY ACCEPTED AUDITING STANDARDS (GAAS). Negative assurance is not appropriate unless the CPA has made an examination in accordance with GAAP for the accounting period before the current one. This is due to the fact that the auditor needs evidence that can be related to comfort letter procedures. For negative assurance to be permissible, the evidence must have been gathered directly by the CPA giving the assurance, and not by another CPA.
| Nationaldo Notcallregistry, Nationalassociation of State Boards of Accountancy (NASBA), Nationalassociation of Securities Dealers (NASD) | |
| Negative Confirmation, Negative Goodwill, Negligence |
Investopedia Financial Dictionary:
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Negative Assurance
A representation that particular facts are believed to be accurate 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 financial reports. Since fully auditing a public company in accordance with generally accepted accounting standards is an extremely large task, a positive assurance is normally issued only when legally required.
Investopedia Says:
A positive assurance of accuracy is considered stronger, and is required for certain audited financial reports released by public companies. Negative assurance is most often issued when an accountant reviews certified financial statements prepared by another accountant. In this case, since another accountant has already certified the accuracy of the statements, a negative assurance is often seen as sufficient to confirm that the statements are free or material misstatements.
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Barron's Accounting Dictionary
Dictionary of Accounting Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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