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The Ten Generally Accepted Auditing Standards

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The Ten Generally Accepted Auditing Standards Dr. Donald K. McConnell Jr. Background on GAAS Three General Standards Three Standards of Field Work Four Standards of ... – PowerPoint PPT presentation

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Title: The Ten Generally Accepted Auditing Standards


1
The Ten Generally Accepted Auditing Standards
  • Dr. Donald K. McConnell Jr.

2
Background on GAAS
  • Three General Standards
  • Three Standards of Field Work
  • Four Standards of Reporting
  • Largely Unchanged Since Late 1940s
  • First General Standard and the Standards of Field
    Work Were Recently Revised SAS 105

3
First General Standard
  • The audit must be be performed by a person or
    persons having adequate technical training and
    proficiency as an auditor.

4
Second General Standard
  • In all matters relating to the assignment, an
    independence in mental attitude is to be
    maintained by the auditor or auditors.

5
Third General Standard
  • Due professional care is to be exercised in the
    planning and performance of the audit and the
    preparation of the report.
  • Note especially definitions of
  • Professional skepticism (Au 230.07-.09)
  • Reasonable assurance (Au 230.10-.13)

6
First Standard of Field Work
  • The auditor must adequately plan the work and
    must properly supervise any assistants.

7
Second Standard of Field Work
  • The auditor must obtain a sufficient
    understanding of the entity and its environment,
    including its internal control, to assess the
    risk of material misstatement of the financial
    statements whether due to error or fraud, and to
    design the nature, timing, and extent of further
    audit procedures.

8
Third Standard of Field Work
  • The auditor must obtain sufficient appropriate
    audit evidence by performing audit procedures to
    afford a reasonable basis for an opinion
    regarding the financial statements under audit

9
First Standard of Reporting
  • The report shall state whether the financial
    statements are presented in accordance with
    generally accepted accounting principles

10
Second Standard of Reporting
  • The report shall identify those circumstances in
    which such principles have not been consistently
    observed in the current period in relation to the
    preceding period

11
Third Standard of Reporting
  • Informative disclosures in the financial
    statements are to be regarded as reasonably
    adequate unless otherwise stated in the report

12
Fourth Standard of Reporting
  • 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
    opinion cannot be expressed. When an overall
    opinion cannot be expressed, the reasons
    therefore should be stated. In all cases where
    an auditors name is associated with financial
    statements, the report should contain a clear-cut
    indication of the character of the auditors
    work, if any, and the degree of responsibility
    the auditor is taking.

13
Various Issues
  • Statements on Auditing Standards (SASs) are
    considered to be interpretations of the 10 GAASs
  • Consequences of Violating GAAS
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