Gaas

With an increase in fraudulent activity with financial reporting and tampering with stating earnings, auditing has become a more important task among companies. Auditing is useful as a means of assuring the company’s financial aspects. Auditors are responsible for adhering to auditing standards. The most widely used standards for auditors are the generally accepted auditing standards, GAAS. The GAAS apply to financial, operational, and compliance audits. Along with GAAS, the Sarbanes-Oxley Act of 2002 and the Public Company Accounting Oversight Board, PCAOB, will also have an effect on audits of publicly traded companies.

Just as managers are to follow GAAP, auditors are responsible for following GAAS. GAAS are grouped into three categories that include: general standards, standards of field work, and standards of reporting. The general standards provide the qualifications and the quality of the auditor and the auditor’s work. Under the general standards category, the auditor is responsible for adequate technical training and proficiency, an independent mental attitude, and due professional care. The standards of field work apply to the conduct of the audit at the specified place of business. To meet the standards of field work, the auditor should have adequate planning and proper supervision, understand the entity and environment (including internal control), and sufficient competent audit evidence. The auditor must meet four standards when reporting the results of an audit. The financial statements are to be presented according to GAAP. The application of GAAP must be consistent, along with adequate informative disclosures. The final step requires the auditor to present an expression of opinion.