An internal audit function is explaining to a newly appointed audit committee member how assurance services differ from advisory services under the Global Internal Audit Standards. Which statement captures the essential difference between the two?
- AAssurance services generate advice that the client is free to accept or reject, whereas advisory services deliver a formal conclusion that external stakeholders rely upon.
- BAssurance services give an independent assessment of a subject for stakeholders, while advisory services provide advice at the client's request without the auditor assuming management responsibility. Correct
- CBoth services produce an independent conclusion for stakeholders, differing only in whether the engagement was requested by management or placed in the audit plan.
- DAssurance services may be performed only by external auditors, while advisory services are the sole preserve of the internal audit function inside the organisation.
Why A is wrong: This is tempting because it uses the right vocabulary, but it reverses the two services: advice the client may accept or reject describes advisory work, and a conclusion relied upon by stakeholders describes assurance.
Why B is correct: Correct: assurance is an independent assessment communicated to stakeholders, and advisory is client-requested advice in which the auditor supports but does not take over management's responsibilities.
Why C is wrong: The trigger for an engagement is a real distinction, but advisory work does not produce an independent conclusion for third-party stakeholders, so treating both as opinion-bearing is wrong.
Why D is wrong: This sounds orderly but is false: internal auditors routinely perform assurance engagements, and external parties can also provide advisory work, so provider identity is not the dividing line.