Generally Accepted Auditing Standards definition
/What are Generally Accepted Auditing Standards?
Generally Accepted Auditing Standards is a set of guidelines used by auditors to conduct an audit. These guidelines are promulgated by a national standard-setting body, which is the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA).
The guidelines are broken down into general standards, fieldwork standards, and reporting standards. The guidelines address how an auditor is to conduct and report on his or her audit of a client's financial records and financial statements, including the types of opinions that can be rendered. In more detail, the guidelines cover the following areas:
1. General Standards. These standards address the auditor’s qualifications and independence:
Adequate training and proficiency. The auditor must have the proper training and experience to perform the audit.
Independence. The auditor should be independent in both fact and appearance, with no biases or conflicts of interest that could impair objectivity.
Due professional care. The auditor must conduct the audit with diligence, following established procedures and standards, and exercising a high level of professional care and judgment.
2. Standards of Fieldwork. These standards focus on the actual conduct of the audit:
Proper planning and supervision. The audit must be well-planned, and assistants (if any) must be properly supervised.
Understanding of internal control. The auditor must gain an understanding of the entity's internal control to assess the nature, timing, and extent of audit procedures.
Sufficient, competent evidence. The auditor must gather sufficient and appropriate evidence to provide a basis for the audit opinion. This includes obtaining relevant and reliable information to substantiate findings.
3. Standards of Reporting. These standards pertain to how audit findings are communicated:
Consistency. The auditor should state whether the financial statements are consistent with previous periods, or note any changes.
Disclosure. All necessary disclosures should be included in the financial statements. If there are any omissions or inadequate disclosures, they should be reported.
Opinion. The auditor should express an opinion on the financial statements as a whole, indicating whether they fairly present the financial position, results of operations, and cash flows in accordance with the applicable financial reporting framework.
Association with financial statements. If an opinion cannot be given, the auditor must state why, and in some cases, issue a disclaimer.
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