By and large Accepted Auditing Standards Essay, Research Paper
GENERALLY ACCEPTED AUDITING STANDARDSApril 10, 1996 Generally Accepted Auditing Standards are those guidelines which hearers must adhere to while carry oning an audit of a company & # 8217 ; s or authorities entity & # 8217 ; s fiscal statements. It must besides be stated in the audit study that the audit was conducted following By and large Accepted Auditing Standards. This has been required since 1941 after the probe of a big drug company, McKesson & A ; Robbins, Inc. , which had had financess embezzled by its president and his three brothers. Neither the internal controls or the independent hearers detected the peculation. By and large Accepted Auditing Standards are divided into three chief countries: 1 ) General Standards, 2 ) Standards of Fieldwork, and 3 ) Standards of Reporting. Each country contains three or four specific criterions. General Standards There are three general criterions. They deal with proficient preparation and proficiency, independency, and due professional attention. To hold proficient preparation and proficiency agencies you have the proper educational background. This is demonstrated by go throughing a comprehensive scrutiny. Independence is the most of import property of an hearer. An hearer must stay independent of the client at all times and avoid all state of affairss that may endanger his independency. Due professional attention means working carefully and being willing to take duty for the truth of your work. Standards of Field Work There are three criterions of field work. They address proper planning and supervising, scrutiny and rating of internal controls, and roll uping sufficient and competent grounds. An hearer must adequately be after his audit in progress and be familiar with the concern and industry of his client. He should prove the internal control system of the client, particularly those controls on which he plans to trust during the audit. He should obtain the most dependable grounds availabl
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grounds. Standards of Reporting There are four criterions of describing. They are concerned with whether the fiscal statements are presented in conformity with Generally Accepted Accounting Principals ( GAAP ) , consistence, enlightening revelations, and an look of sentiment on the fiscal statements that have been audited. The audit study must explicitly province whether the fiscal statements have been prepared in conformance with GAAP and whether or non these rules have been applied systematically from one twelvemonth to the following. Unless stated otherwise, it should be assumed that the enlightening revelations stated in the fiscal statements are equal. Any lacks in this country should be specifically stated in the audit study. Footnotes must incorporate all the relevant information needed to be able to decently construe the fiscal statements. Finally, the hearer must show an sentiment on the fiscal statements. The hearer should publish either an unqualified, qualified, inauspicious, or disclaimer of sentiment. The basic format for each of these sentiments is reasonably much pre-established. In a qualified or inauspicious sentiment, an extra paragraph should be added for each job found within the fiscal statements. A disclaimer of sentiment should be issued any clip an hearers independency is violated or if he is unable to finish the full audit for some ground. Conclusion Each of the criterions carry equal weight and should be followed while carry oning any audit whether it is a private concern or a governmental entity. Depending on the specific audit, there may be other criterions which besides apply. SOURCESBiar, B. , and Grinaker, R. ( 1965 ) . Auditing: The Examination of Fiscal Statements. Homewood: Richard D. Irwin, Inc. Carmichael, D. , Lilien, S. , & A ; Mellman, M. ( 1991 ) .Accountants Handbook ( 7th Edition ) . New York: John Wiley & A ; Sons. Robertson, J. ( 1996 ) .Auditing ( 8th Edition ) . Chicago: Irwin.