December 15, 2012
Generally Accepted Auditing Standards
Generally Accepted Auditing Standards are set forth, so an auditor’s performance can be judged against something. Since 2002 and the introduction of the Sarbanes-Oxley Act auditing requirements have undergone many changes. As the times and technology change so must the profession. Generally Accepted Accounting Standards (GAAS) have 10 elements and are divided by three categories; general, field work and reporting.
The first four elements fall under the general section. They state things like the need for an auditor’s technical training to perform an audit and that the auditor must maintain an independence from the company he is auditing. An auditor must also exercise professional care during the audit and the preparation of the report. Under the standards of field work are three more elements: Wherein it states that the auditor must plan its work adequately and supervise assistants. The auditor must also get a good understanding of the entity he is auditing, as well as have sufficient audit evidence to form and opinion toward the financial statements.
The third section goes into standards of reporting and contains four elements; one of them requires the auditor to state whether or not a company follows Generally Accepted Accounting Standards (GAAP). The auditor must also point out when a company strays from GAAP. When the auditor determines that informative disclosures are not reasonably adequate, the auditor must so state in the auditor 's report. Lastly, the auditor must express an opinion in regards to the audited financial statements.
Three types of audits
There are three types of audits; financial, operational and compliance. A financial audit is an analysis of a company’s financial records and documentations and their integrity. Such and audit can be done at any level. Audits are intended to show whether a
References: Answers.com. (December 2012). Barron 's Accounting Dictionary. Retrieved from http://www.answers.com/topic/operational-audit ehow.com. (2012). Financial Audits. Retrieved from http://www.ehow.com/about_5066315_financial-audit.html http://en.wikipedia.org/wiki/Generally_Accepted_Auditing_Standards wikipedia.org. (November 27, 2012). Generally Accepted Auditing Standards. Retrieved from http://en.wikipedia.org/wiki/Generally_Accepted_Auditing_Standards PCAOB, (December 2012). Standards of Accounting. Retrived from http://pcaobus.org/Enforcement/Pages/default.aspx