Generally Accepted Auditing Standards Case
This paper will describe the nature and functions of auditing. It will describe the key parts of the Generally Accepted Auditing Standards (GAAS) and will give detail on how they apply to financial, operational and compliance audits. This paper will also explain the effect that the Sarbanes-Oxley Act of 2002, and the Public Company Accounting Oversight Board (PCAOB), will have on audits of public companies. Finally this paper will discuss additional requirements that are placed on auditors from Sarbanes-Oxley Act and the actions of the Public Company Accounting Oversight Board.
Elements of Generally Accepted Auditing Standards
Generally Accepted Auditing Standards are auditors set guidelines which the audits are performed. By relying on GAAS auditors can minimize the probability of missing material information. These guidelines are set by the AICPA. GASS contains 10 different standards which are broken down into three different sections.
Section one is General Standards. This section consists of three standards. The auditor must have adequate technical training and proficiency, they must be independent from the company being audited, and must use due care.
Section two is Standards of Field Work. This section also consists of three standards on how the audit should be performed. The auditor must have adequate planning and the proper supervision if there is any assistance. The auditor must have a sufficient understanding of the entity and its environment to include internal controls. The proper audit procedures should be performed for sufficient competent audit evidence.
Section three is Standards of Reporting. This section contains the remaining four standards. The reports must state if the financial statements are presented in accordance to GAAP. There must be a consistency in the application of GAAP. There must also be adequacy of information disclosures. Finally the report should contain wither an expression of opinion or an assertion to the effect that an opinion could not be expressed.
How the standards apply to financial, operational and compliance