Acc 490 - Generally Accepted Auditing Standards

Generally Accepted Auditing Standards

Tamika Nimely

ACC490

Monday, May 7, 2012

Eric Elefante

Auditing Standards

By having confident on generally Accepted Auditing Standards, auditors can decrease the chance of missing material information. "Generally Accepted Auditing Standards are separated into three main sections:

* Generally Standards

* Standards of fieldwork

* Standards of reporting"(Investopedia, 2012)

Each section is cluttered with requirements that auditor and the subject company must meet. In brief, an auditor must sufficiently plan the audit in advance, be independent of the client of all times, and always acquire reliable affirmation. "The companies must present their financial statements in conformance with GAAP (General Accepted Accounting Principles), remain dependable in their reporting, and absolutely disclose all relevant information"(Investopedia, 2012). This paper will be discussing the elements of the Generally Auditing Standards (GAAS). Next that is going to be discussed is how GAAS apply to financial, operational, and compliance audits. Then explain the effect that the Sarbanes-Oxley Act of 2002, and the Public Company Accounting Oversight Board (PCAOB), will have on audits of publicity traded companies. Finally this paper is going to discuss the additional requirements that are placed on auditors from this act and actions of the PCAOB.

The Elements of Generally Accepted Auditing Standards

Generally accepted accounting principles are accounting principles which have ample accurate support, "such as approval by the Governmental Accounting Standards Board of the Financial Accounting Standards Board, or its prototype, the Accounting Principles Board"(Professional). These standards supply the precedent for financial reporting, involving the nature and appeased of financial statements. "GAAS assign to the 10 broad standards and the statement on Auditing Standards set forth by the Auditing Standards Board of the AICPA. Generally accepted auditing standards change depending on whether the audits are of a public or nonpublic company"(Professional).

"In 2007, 14,264 audits in 8,246 supplier factories were conducted by Wal0Mart's ethical standards group and third-party audit firms of the audited for direct imports and 2,105 outturned domestically-sourced merchandise"(Wal-Mart, 2009). "They also received 1,306 audits administered by International Council of Toy Industries and the International Labor Organization. The ICTI (International council of Toy Industries and the ILO (International Labor Organization) audits are administered under a assigned standard and are acquired by multiple brands and retailers"(Wal-Mart, 2009).

Standards apply to financial, operational, and compliance audits

The financial, Operational and Compliance Audit Group is responsible for convincing

that financial and operational controls are in place and working correctly through the

organization. "Audit assurances extant from audits are small departments to abundant

departments, as well audits of particular departmental and organization-wide methods"(Harvard, 2009). "Their goal is to supply a favorable service to each of their customers by identifying carelessness and control blemishes and advising ways to correct them.