Accounting 491 Week 1 Lecture

The Generally Accepted Auditing Standards (GAAS) are the key framework concerning the quality standards which auditors are expected to uphold.  Not surprisingly, auditors are held to a very high standard in terms of qualifications, integrity, and independence.  Using my past experiences as an auditor at KPMG Peat Marwick along with my experience at Ford Motor Company on the receiving end of an audit, I will illustrate the importance of the GAAS. 

 The GAAS are composed of three main categories of standards which are General Standards, Standards of Field Work, and Standards of Reporting. 

 The General Standards are concerned with the auditor’s qualifications and the quality of his work.  Education and work experience are both key factors in assessing qualifications.  Even subsequent to obtaining a college degree, virtually all auditors in public practice continue to take professional education courses to maintain their skill set.  When I started as an assistant staff auditor with KPMG, I was required to go through a one week “Accounting Boot Camp” to get grounded on KPMG’s approach to auditing and client service.  In order to become a Certified Public Accountant (CPA), several years of work experience is required (requirements vary by state).  Even after becoming certified, CPAs are required to perform at least 40 hours of continuing professional education each and every year to maintain their certification.  Accounting regulations change constantly and continuing professional educational opportunities ensure that the skills of the auditor remain fresh.

 The other general standards concern independence and due professional care.  When I worked for KPMG, we were required to sign a waiver which stated that we did not own stock in any of the company’s audit clients.  Therefore, even though I worked in a North Carolina office of KPMG and our Seattle office audited Microsoft (and I had absolutely no dealings with Microsoft), I was not able to own any Microsoft...