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Generally Accepted Accounting Practices Essay

961 words - 4 pages

PAGE PAGE 4 Generally Accepted Auditing Standards
Generally Accepted Auditing StandardsCarl R. FosterJanuary 12, 2009Mark StillionUniversity of PhoenixGenerally Accepted Auditing StandardsThe elements of the Generally Accepted Auditing Standards (GAAS), and how these standards apply to financial, operational, and compliance audits will be described. Also, an explanation of the effects that the Sarbanes-Oxley Act of 2002 (SOX), and the Public Company Accounting Oversight Board (PCAOB), will have on audits of publicly traded companies. Discussion on additional requirements that are placed on auditors from this act, and the actions of the PCAOB will ensue.Auditing is a process by which economic events and processes are evaluated and verified as true and correct. The information is then evaluated to ensure that it follows GAAP or any other standards that apply. GAAS should be considered as the minimum standard required of an auditor in the execution of an audit engagement. The ultimate legal question is whether the auditor adhered to reasonable circumstances in compliance with GAAS and GAAP.Generally Accepted Auditing Standards Generally Accepted Auditing Standards or GAAS is "a set of systematic guidelines used by auditors when conducting audits on companies' finances, ensuring the accuracy, consistency and verifiability of auditors' actions and reports" (Lexico Publishing Group, 2008). The following paper will explain the elements of GAAS and how GAAS is applied to audits. GAAS has three elements. They are general standards, standards of field work, and standards of reporting. These standards have their own set of rules with strict adherence during every auditing process. General standards are the qualifications the auditor must have before an individual can perform an audit. There are three general standards, adequate technical training and proficiency, independence in mental attitude, and due professional care. The main points are: 1. The audit is to be performed by a person or persons having adequate technical training and proficiency as an auditor. 2. In all matters relating to the assignment, independence in mental attitude is to be maintained by the auditor or auditors.3. Due professional care is to be exercised in the performance of the audit and the preparation of the report" (Boynton & Johnson, 2006). Standards of Field Work are named because it is what must be done while performing the audit at the company. There are also three main sections to this standard, adequate planning and proper supervision, understanding the entity and its environment, and sufficient competent audit evidence. The main points of this standard are summed up by Boynton and Johnson in the following statement: 1. The work is to be adequately planned and assistants, if any, are to be properly supervised. 2. A sufficient understanding of the clients internal controls is to be obtained. 3. sufficient competent evidence is to be obtained to afford a reasonable...

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