Acc490Wk1

Generally Accepted Auditing Standards

Catherine Groenhoff,

ACC/490

April 16, 2012

Judy Thomas

Generally Accepted Auditing Standards

To ensure that public companies are audited in a similar way, a set of auditing standards has been widely adopted. There are 10 standards, and they are intended to be a broad guide for what how audit should be approached. These standards are known as the Generally Accepted Auditing Standards or GAAS and were originally created in the late 1940s. Rather than a detailed step-by-step procedure of how to do audits, these standards establish how audits should be done at a high-level – the conceptual aspects of what should be included.

The first three standards are general standards and include adequate technical training and proficiency wherein the competency of the auditor is determined by his or her formal education, practical training, experience, and continuing education in the field. The second standard is independence in mental attitude, meaning the auditor should be free of the influence of the company’s management when performing the audit. The auditor should not approach the audit with any bias toward the outcome. The third standard is due professional care. This standard requires that the auditor be diligent in his efforts and not neglect any pertinent information – he or she must also critically review the work done by any less experienced auditors on the team. Just as a physician is expected to use good judgment and care, so too must an auditor.

The second three standards are the standards of fieldwork. The first of these standards require that the work is to be adequately planned and assistants are to be adequately supervised. This helps ensure that the audit is not just thrown together hastily without regard for the process and outcome. The second standard is that the auditor should have a sufficient understanding of the internal workings of the organization and its financial statements. Such...