Final answer:
Assurance engagements are accounting and auditing processes where an independent auditor assesses and reports on the reliability of an entity's internal controls or prospective financial information to boost stakeholder confidence.
Step-by-step explanation:
Reporting on an entity's internal controls or prospective financial information are examples of assurance engagements. In the field of accounting and auditing, assurance engagements involve an independent auditor assessing various aspects of a company to report on the reliability and validity of the information provided. These engagements help to instill confidence in the information being presented to users, such as investors, creditors, or regulatory agencies.
For internal controls, an assurance engagement may involve evaluating the effectiveness of an organization's procedures and systems in managing risks and ensuring the accuracy of financial reporting. Meanwhile, in reporting on prospective financial information, an auditor reviews and reports on forecasts and projections made by management regarding future financial results.
Both types of engagements require auditors to follow professional standards and provide reasonable assurance that the information upon which they are reporting is free from material misrepresentation. Whether providing assurance on internal controls or prospective financial information, professionals aim to enhance the reliability of the information provided for decision-making purposes.