Generally Accepted Audint Principles

The Generally Accepted Auditing Standards (GAAS) are standards that were created and set by the American Institute of Certified Public Accountants (AICPU), which all certified public accountants are required to be in compliance with. The GAAS standards were created for accountants to conduct audits while acting ethically and adhering to the general standards, field work standards and the reporting standards. These Standards are set to ensure auditors perform their work in a professional manner as determined by the GAAS. If a certified public accountant does not perform professionally are directly responsible for the losses of any investors who have relied on their inappropriate financial reporting.

There are ten standards of the GAAS, which are incorporated into three categories: general, field work and reporting standards. The general standards of the GAAS state that an auditor must be trained to do auditing work and perform that work in a professional manner. The field work standards ask that the auditor is able to understand the entity for which he is auditing and the auditor effectively plan the work and supervise and assistants that may be assisting with the audit. All opinions that are made on the financial statements by the auditor must be based on sound evidence. The reporting standards indicate that the auditor must form an opinion on the financial reports or specify why no opinion was formed. In addition, the auditor must report whether the entity is in accordance with the generally accepted accounting principles (GAAP) and if the entity is not, they must classify where the entity is not in compliance.

Financial audits take place when a corporation’s financial statements are checked for compliance with the GAAP. Operational audits give an evaluation on how effective an organization is in regards to structure, controls, procedures and processes. The general standards category mostly applies to the financial audits. In Au section 322, the GAAS...