Generally Accepted Auditing Standards (GAAS) - Overview

Introduction

There are a number of accounting guidelines and standards known as the Generally Accepted Auditing Standards (GAAS). They give auditors the framework for planning and reporting an audit outcome. In 1972, the American Institute of Certified Public Accountants (AICPA) developed it. AICPA member auditors are currently required to adhere to 10 standards known as GAAS. Any audit or auditing technique used by auditors must follow GAAS.

Although the AICPA is an American organization, audit members come from many different nations.

They adhere to GAAS since it is required by the AICPA's code of professional conduct. We can assert that GAAS offers an international framework for auditing. It makes it easier for auditors to utilise it as a model for their auditing procedures. Further, norms are followed based on the country of audit, industry, and the audit body of that country.

According to the AICPA, an independent auditor must plan, conduct, and report the results of an audit in accordance with GAAS. These standards provide a scale to measure the quality of the audit and its objectives.

Auditors need to follow procedures to do the audit. These procedures must be done so that they comply with auditing standards.

According to GAAS, the 10 standards fall into three categories, general, field reporting and reporting standards.

General Standards

• The audit must be performed by an auditor who has proficiency and technical training.
• Throughout the audit, the auditor must maintain an independent and objective attitude.
• Due professional care must be taken by the auditor both while performing the audit and in the preparation of the audit report.

Standards of Field Work

• During the audit, the auditor must plan the work, allocate it to assistants if any and supervise them.
• The auditor must sufficiently understand the business entity and its environment. They must also have an understanding of its internal control, so that they may assess the risk of material misstatement of the financial statements due to error or fraud. They must also design the audit procedures' nature, timing, and extent for future audits.
• Sufficient and appropriate audit evidence must be obtained by performing the audit procedures. This enables a reasonable basis for an opinion about the financial statements under audit.

Standards of Reporting

• The auditor must inform in the auditor's report whether the financial statements presented are in accordance with GAAS.