Audit Term Paper

Statement on Auditing Standards No. 95, Generally Accepting Auditing Standards, takes effect for audits of financial statements for periods beginning on or after December 15, 2001, this SAS supersedes that of SAS No. 1. It implies that any independent auditor is to plan, report and conduct an audit in accordance to generally accepted auditing standards (GAAS).

What is known as the "10 standards" approved for auditors are broken down into three categories.

General Standard (consisting of 3 standards):

• A person or persons having adequate technical training and proficiency as an auditor should perform the audit.

• In all matters relating to the assignment, independence in mental attitude is to be maintained by the auditor or auditors.

• Due professional care is to be exercised in the performance of the audit and the preparation of the report.

Standards of Field Work (consisting of 3 standards):

• The work is to be adequately planned and assistants, if any, are to be properly supervised.

• A sufficient understanding of internal controls is to be obtained to plan the audit and to determine the nature, timing, and extent of tests to be performed.

• Sufficient competent evidential matter is to be obtained through the inspection, observation, inquires, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under audit.

Standards of Reporting (consisting of 4 standards):

• The report shall state whether the financial statements are presented in accordance to GAAP.

• The repot shall identify those circumstances in which such principles were not consistently observed in the current period in relation to the preceding period.

• Informational disclosures in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report.

• The report shall contain either an expression of opinion regarding the financial statements, taken as a whole, or an assertion to the effect that an...