Importance of Generally Accepted Auditing Standards (GAAS)

 Essay about Importance of Generally Accepted Auditing Standards GAAS

Accounting

Importance of Generally Accepted Auditing Standards (GAAS)

Miriam Manjarres

November 18, 2012

Subjective

The Generally Acknowledged Auditing Criteria are criteria that were designed through the American Institute of Certified Open public Accountants as being a foundation in conducting a great audit in the reasonable accuracy. There is a requirement for auditors to follow the standards supplied to be able to make a report of the financial assertions audited stating that it is clear of any misstatement. GAAS will be divided into 3 categories such as the general requirements, the standards of fieldwork and standards of reporting. Auditors can provide reports in the financial transactions audited in four techniques. The statement render can be qualified opinion, unqualified opinion, negative opinion and disclaimer of opinion. Auditors who considered as the report to reduce any material defect may render a written report of untrained opinion and a palinode is released if the auditor will not be in a position to render a written report on the basis of wish of sufficient information. Self-reliance and impartiality are personality traits that auditors need to nurture and the materiality associated with an audit locating has an inverse relationship with audit risk.

Introduction

An enterprise entity has the need to prepare economical statements that will truly reveal its financial performance in a business cycle. The economical statement can serve as evidence on how the entity fared, on regardless of whether it was in a position to gain a profit or experienced a loss while executing its daily business operation. The well prepared financial statements will show the financial position, the great income, the amount flows and the changes in equity of the company. Failure to reflect a precise report will have dire outcomes not only to the business organization nevertheless also towards the other stakeholders. Thus, organization entities need to accurately statement its monetary standing in fact it is the position of the auditors to render an review that will effectively show the economical standing in the company with the aid of Generally Recognized Auditing Specifications. The government got imposed rules as well as rules on how these financial statements are made. This is to prevent businesses from misstating their economic reports especially if it has the intention to mislead the population and its stakeholders on it is true monetary standing. To further safeguard the stakeholders whom are relying on the business entity's reported monetary statements, the us government is requiring that these financial reports become audited by simply external auditors who will check the reasonableness of its accuracy. These auditors must remain independent and target in performing the audit to prevent the stakeholders coming from thinking normally. There are also rules and guidelines that auditors follow in conducting the audit. The Generally Accepted Auditing Standards (GAAS) contains the required guidelines that will aid auditors in conducting a great audit that may truly indicate the true monetary standing of a business enterprise.

Background

The Generally Accepted Auditing Standards (GAAS) was developed by the American Company of Authorized Public Accountancy firm when it has the authority to oversee and offer guidelines in the conduct of Certified Community Accountants inside the Accounting and Audit Job. " The Auditing Standards Board of the AICPA designed ten generally accepted auditing standards pertaining to the review of financial transactions that serves as a groundwork for all additional standards, which include those that have been adopted by PCAOB. As the standards are conceptual in nature, an awareness of them offers a foundation to raised understand other standards. The said standards are progressed into three classes such as the basic standards which in turn apply to the auditor plus the audit company, fieldwork specifications which affect the perform of the taxation and the last is the confirming...

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