- The 10 generally accepted auditing standards were adopted by the profession to provide a measure of quality for audits. These standards are divided into three types: general standards, standards of field work, and standards of reporting. All audits must be performed in accordance with generally accepted auditing standards.
- An audit provides reasonable assurance of detecting material misstatements of the financial statements (both errors and fraud) and illegal acts that have a direct and material effect on the determination of financial statement amounts. Although an audit does not provide reasonable assurance of detecting illegal acts that have only an indirect effect on the financial statements, the auditors remain alert for such acts. If illegal acts are discovered, regardless of their type, the auditors must carefully evaluate their effects on the financial statements.
- The attestation standards were adopted to provide a general framework for the attest function, and to set boundaries for these types of engagements. Similar to the generally accepted auditing standards, the 11 attestation standards are structured as general standards, standards of field work, and standards of reporting.
- CPA firms establish quality control systems to ensure that all professional engagements are performed in accordance with applicable professional standards. The AICPA’s Quality Control Standards provide guidance in developing these systems. CPA firms with SEC reporting clients undergo inspections required by the Public Company Accounting Oversight Board. Other CPA firms may arrange to have their practices peer reviewed by other CPAs. Obtaining such inspections and peer reviews is a requirement for membership in the AICPA.
- In the future, auditing standards are expected to be developed on an international basis. Currently, the International Auditing and Assurance Standards Board issues pronouncements designed to foster the development of consistent worldwide auditing standards.
Describe the 10 generally accepted auditing standards. |
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Identify the authoritative status of the Statements on Auditing Standards. |
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Discuss the auditors' responsibility for detecting errors, fraud, and illegal acts. |
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Explain the key elements of the auditors' standard report. |
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Discuss the other types of reports that are issued by auditors. |
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Describe the attestation standards. |
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Discuss the nature of assurance services. |
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Describe the quality control standards and their purposes. |
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Explain the status of international auditing standards. |