What type of assurance do companies seek from independent accountants for their financial statements?

Companies typically seek limited assurance from independent accountants for their financial statements. Limited assurance means that the accountants provide a moderate level of assurance based on the procedures they perform. This entails reviewing a company's financial statements to identify any material misstatements, but not providing the same thorough examination that would be required for a higher level of assurance like that found in an audit.

In practice, limited assurance is common in situations such as reviews of quarterly financial statements, where the cost and time required for a full audit (which offers a higher level of assurance) may not be warranted. The accountants will perform analytical procedures and inquiries but will not conduct the extensive testing of transactions and internal controls that are characteristic of a full audit.

This approach allows companies to demonstrate a level of credibility and reliability in their financial statements without incurring the full expense and effort associated with an audit. Such assurance is useful for stakeholders who are interested in the financial health of the company, but it is understood that it does not provide the same level of certainty as an audit, where absolute assurance is more likely aligned with full compliance and reliability.