Gaas

Introduction

Auditing is a means of obtaining assurance to the fair presentation of financial statements. Auditors utilize auditing standards when performing audits known as the 10 Generally Accepted Auditing Standards (GAAS). Auditors employ GAAS when performing various types of audits in order to determine a reasonable level of assurance. Sarbanes-Oxley Act of 2002 (SOX) and the Public Companies Accounting Oversight Board (PCAOB) are responsible for setting auditing standards for public companies.

The Auditing Process

Auditing is a procedure of collecting and evaluating evidence regarding assertions and communicating the results obtained to interested parties. When conducting audits an auditor utilizes a six step process for completing the audit. This process ensures that the auditor is able to provide a level of assurance to the fair presentation of an entity’s financial statements. The audit process consists of:

* Performance risk assessment procedures

* Assessing the risk of material misstatement

* Respond to assessed risks

* Performing further audit procedures

* Evaluating audit evidence

* Communicating audit findings

(Boynton & Johnson, 2006, p. 185).

Ten Generally Accepted Auditing Standards (GAAS)

The 10 Generally Accepted Auditing Standards (GAAS) establish performance quality expectations and necessary objectives when performing audits on financial statements. The 10 GAAS are sub-grouped into three standards:

* General standards

* Standards of field work

* Standards of reporting

General standards provide the qualifications necessary of the auditor and set the level of quality of work provided by an auditor. Standards of field work provide provisions pertaining to planning and supervision of assistance when performing an audit, understanding of the entity and its environment, and objectives for obtaining competent evidence when performing audits. Standards of reporting provide objectives and...