Generally Accepted Auditing Standards Paper
Generally Accepted Auditing Standards Paper
University of Phoenix
ACC 490 Auditing
February 7, 2011
Generally Accepted Auditing Standards Paper Every auditor is expected to follow the standards of the industry while conducting audits for clients. The most widely used standards were originally established in the 1940s and were adopted by the Public Company Accounting Oversight Board PCAOB in 2003 and are referred to as the Generally Accepted Auditing Standards GAAS (Boynton & Johnson, 2006). The GAAS consist of 10 standards (refer to appendix a) within three different categories. These categories cover the accepted code of conduct for auditors in each phase of an audit from the general standards to standards of field work and reporting standards. The GAAS apply to each type of audit that occurs in the workplace whether it is a financial, operational, or compliance audit. GAAS affect how a company approaches a financial audit. When analyzing the financial statements one of the important aspects of auditing is the independence of the auditor from the company experiencing an audit. With regard to this required independence many states only allow CPAs to perform financial audits and most companies will rely on external auditors to ensure independence. Operational audits call for recommendations made by the auditor or auditors on the effectiveness of an operation within the company based on the objectives of the operation. In this role, the efficiency reports given by the auditing body are vital in making recommendations for improvements. This makes it important for the auditors to practice due professional care when performing the audit. Compliance audits, by definition, deal with the company’s compliance to rules and regulations, and as such need to be scrutinizing. The Sarbanes-Oxley Act SOX requires public companies to be audited with regard to both the financial statements and the management’s assertion as to whether the reports are in compliance
University of Phoenix
ACC 490 Auditing
February 7, 2011
Generally Accepted Auditing Standards Paper Every auditor is expected to follow the standards of the industry while conducting audits for clients. The most widely used standards were originally established in the 1940s and were adopted by the Public Company Accounting Oversight Board PCAOB in 2003 and are referred to as the Generally Accepted Auditing Standards GAAS (Boynton & Johnson, 2006). The GAAS consist of 10 standards (refer to appendix a) within three different categories. These categories cover the accepted code of conduct for auditors in each phase of an audit from the general standards to standards of field work and reporting standards. The GAAS apply to each type of audit that occurs in the workplace whether it is a financial, operational, or compliance audit. GAAS affect how a company approaches a financial audit. When analyzing the financial statements one of the important aspects of auditing is the independence of the auditor from the company experiencing an audit. With regard to this required independence many states only allow CPAs to perform financial audits and most companies will rely on external auditors to ensure independence. Operational audits call for recommendations made by the auditor or auditors on the effectiveness of an operation within the company based on the objectives of the operation. In this role, the efficiency reports given by the auditing body are vital in making recommendations for improvements. This makes it important for the auditors to practice due professional care when performing the audit. Compliance audits, by definition, deal with the company’s compliance to rules and regulations, and as such need to be scrutinizing. The Sarbanes-Oxley Act SOX requires public companies to be audited with regard to both the financial statements and the management’s assertion as to whether the reports are in compliance
References: Boynton, W. C. & Johnson, R. N. (2006). Modern Auditing: Assurance services and the integrity of financial reporting, (8 ed.). John Wiley & Sons, Inc. Retrieved February 5, 2011, from University of Phoenix, ACC 490 Auditing course materials page https://portal.phoenix. edu/classroom/coursematerials/acc_490/20110201/ Generally Accepted Auditing Standards. (Last revised December, 2006). American Institute of Certified Public Accountants. Retrieved February 5, 2011, from http://www.aicpa.org /Storage/Resources/Standards/DownloadableDocuments/AU-00150.PDF Kinyo, L. (2010). Generally accepted auditing standards. Hub pages. Retrieved February 6, 2011, from http://hubpages.com/hub/Generally-Accepted-Auditing-Standards