Importance of Generally Accepted Auditing Standards (GAAS)
Accounting
Importance of Generally Accepted Auditing Standards (GAAS)
Miriam Manjarres
November 18, 2012
Abstract
The Generally Accepted Auditing Standards are standards that were developed through the American Institute of Certified Public Accountants as a foundation in conducting an audit in its reasonable accuracy. There is a need for auditors to follow the standards provided to be able to render a report of the financial statements audited stating that it is free from any misstatement.
GAAS are divided into three categories such as the general standards, the standards of fieldwork and standards of reporting. Auditors can render reports of the financial statements audited in four ways. The report render can either be qualified opinion, unqualified opinion, adverse opinion and disclaimer of opinion. Auditors who considered the report to be free from any material defect can render a report of unqualified opinion and a disclaimer is issued if the auditor will not be able to render a report on the basis of want of sufficient information. Independence and impartiality are character traits that auditors must nurture and the materiality of an audit finding has an inverse relationship with audit risk.
Introduction A business entity has the need to prepare financial statements that will truly reflect its economic performance within a business cycle. The financial statement will serve as proof on how the entity fared, on whether or not it was able to gain a profit or suffered a loss while conducting its daily business operation. The prepared financial statements will show the financial position, the comprehensive income, the cash flows and the changes in equity of the company. Failure to reflect an accurate report will have dire consequences not only to the business organization but also to the other stakeholders. Thus, business entities have to accurately report its economic standing and it is the
Importance of Generally Accepted Auditing Standards (GAAS)
Miriam Manjarres
November 18, 2012
Abstract
The Generally Accepted Auditing Standards are standards that were developed through the American Institute of Certified Public Accountants as a foundation in conducting an audit in its reasonable accuracy. There is a need for auditors to follow the standards provided to be able to render a report of the financial statements audited stating that it is free from any misstatement.
GAAS are divided into three categories such as the general standards, the standards of fieldwork and standards of reporting. Auditors can render reports of the financial statements audited in four ways. The report render can either be qualified opinion, unqualified opinion, adverse opinion and disclaimer of opinion. Auditors who considered the report to be free from any material defect can render a report of unqualified opinion and a disclaimer is issued if the auditor will not be able to render a report on the basis of want of sufficient information. Independence and impartiality are character traits that auditors must nurture and the materiality of an audit finding has an inverse relationship with audit risk.
Introduction A business entity has the need to prepare financial statements that will truly reflect its economic performance within a business cycle. The financial statement will serve as proof on how the entity fared, on whether or not it was able to gain a profit or suffered a loss while conducting its daily business operation. The prepared financial statements will show the financial position, the comprehensive income, the cash flows and the changes in equity of the company. Failure to reflect an accurate report will have dire consequences not only to the business organization but also to the other stakeholders. Thus, business entities have to accurately report its economic standing and it is the
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