Generally Accepted Auditing Standards

Investment Dictionary: Generally Accepted Auditing Standards - GAAS

A set of systematic guidelines used by auditors when conducting audits on companies' finances, ensuring the accuracy, consistency and verifiability of auditors' actions and reports.

Investopedia Says:
By relying on GAAS, auditors can minimize the probability of missing material information. GAAS are divided into these main sections:

1) General standards.
2) Standards of fieldwork.
3) Standards of reporting.

Each section is littered with requirements that the auditor and the subject company must meet. In short, an auditor must adequately plan the audit in advance, be independent of the client at all times, and always obtain reliable evidence. The companies must present their financial statements in accordance with GAAP, remain consistent in their reporting, and explicitly disclose all pertinent information.

Related Links:
Learn this easy-to-understand technique of analyzing a company's financial statements and reports. Introduction To Fundamental Analysis
Learn what it means to do your homework on a company's performance and reporting practices before investing. Advanced Financial Statement Analysis

Search unanswered questions...

Browse: Unanswered questions | Most-recent questions | Reference library

5min Related Video: Generally Accepted Auditing Standards

Top

Accounting Dictionary: Generally Accepted Auditing Standards (GAAS)

Top

Broad rules and guidelines promulgated by the AICPA's Auditing Standards Board. CPAs employ GAAS in preparing for and performing audits of a client's financial statements. The guidelines include references to the auditor's qualifications (general standards), audit field work (statements of field work), and reporting the audit results (standards of reporting). The broad standards are backed by detailed interpretative literature. An auditor unable to express an opinion on the financial statements must give reasons. A CPA who does not conduct an examination in accordance with GAAS can be held in violation of the AICPA's Code of Professional Ethics and face legal action by affected parties. See also Statements on Auditing Standards (SAS).

Wikipedia: Generally Accepted Auditing Standards

Top

Accountancy

Key concepts
Accountant Bookkeeping Trial balance General ledger Debits and credits Cost of goods sold Double-entry system Standard practices Cash and accrual basis GAAP / IFRS
Financial statements
Balance sheet Income statement Cash flow statement Equity Retained earnings
Auditing
Financial audit GAAS Internal audit Sarbanes-Oxley Act Big Four auditors
Fields of accounting
Cost • Financial • Forensic Fund • Management • Tax
This box: view • talk • edit

Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits may be judged. Several organisations have developed such sets of principles, which vary by territory.

1 US GAAS
2 ISAs
- 2.1 See also

US GAAS

US GAAS are ten auditing standards, developed by the AICPA, consisting of general standards, standards of field work, and standards of reporting, along with interpretations. They were developed by the AICPA in 1947 and have undergone minor changes since then.

The US GAAS are as follows:

General Standards

The auditor must have adequate technical training and proficiency to perform the audit
The auditor must maintain independence in mental attitude in all matters related to the audit.
The auditor must use due professional care during the performance of the audit and the preparation of the report.

Standards of Field Work

The auditor must adequately plan the work and must properly supervise any assistants.
The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures.
The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit.

The new standards are in effect for audits of financial statements for periods beginning on or after December 15, 2006.

Standards of Reporting

The auditor must state in the auditor's report whether the financial statements are in accordance with generally accepted accounting principles (GAAP).
The auditor must identify in the auditor's report those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period.
When the auditor determines that informative disclosures are not reasonably adequate, the auditor must so state in the auditor's report.
The auditor must either express an opinion regarding the financial statements, taken as a whole, or state that such an opinion cannot be expressed in the auditors report. When the auditor cannot express an overall opinion, the auditor should state the reasons therefore in the auditor's report. In all cases where the auditor's name is associated with the financial statements, the auditor should clearly indicate the character of the auditor's work, if any, and the degree of responsibility the auditor is taking, in the auditor's report.

ISAs

International Standards on Auditing are developed by the International Auditing and Assurance Standards Board of the International Federation of Accountants. Derivatives of ISAs are used in the audit of several other juristictions, including the United Kingdom.

	Because of the risk of material misstatement an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of? Read answer...
	Is there a standard percentage that collections agencies generally accept? Read answer...
	What is International Standards on Auditing 260? Read answer...

Help us answer these

	Differences between Government Auditing Standards and Generally Accepted Auditing Standards?
	Is not required by generally accepted auditing standards what kind statement is not required by generally accepted auditing standards?
	What are the key differences between Generally Accepted Auditing Standards and Government Auditing Standards?

Post a question - any question - to the WikiAnswers community:

Copyrights:

		Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved. Read more
		Accounting Dictionary. Dictionary of Accounting Terms. Copyright © 2005 by Barron's Educational Series, Inc. All rights reserved. Read more
		Wikipedia. This article is licensed under the Creative Commons Attribution/Share-Alike License. It uses material from the Wikipedia article "Generally Accepted Auditing Standards". Read more

	Accountability (in accounting)
	Auditing Standards Board (ASB) (in accounting)
	Piecemeal Opinion (in accounting)