AUD 1.03 - GAAS

Question 1

1.03 - GAAS

Which of the following best describes what is meant by the term generally accepted auditing standards for a PCAOB audit?

A) Pronouncements issued by the Auditing Standards Board

B) Procedures to be used to gather evidence to support financial statements

C) Rules acknowledged by the accounting profession because of their universal application

D) Measure of the quality of the auditor’s performance

Answer 1

D) Measure of the quality of the auditor’s performance

As implied by the term “standard”, generally accepted auditing standards (GAAS) represent benchmarks against which to measure the quality of the auditor’s performance.

GAAS includes rules that are acknowledged by the accounting profession as well as procedures used to gather evidence, which enable the auditor to achieve quality.

GAAS are communicated to the profession in the form of pronouncements issued by the Auditing Standards Board.

Question 2

1.03 - GAAS

10 GAAS Applied to PCAOB and Nonissuers

TIP / PIC / ANOE:

GENERAL STANDARDS - TIP

FIELD STANDARDS - PIC

REPORTING STANDARDS - ANOE

Answer 2

GEN STANDARDS:

1) Training / Proficiency: CPE / Knowledge of industry
2) Independence:
- Integrity/Objectivity
- No direct interest (mat/immat)
- No material indirect interest
3) Due Professional Care
- Skill
- Due diligence/review

FIELD STANDARDS:

1) Planning/Supervision
2) Internal Controls - rely?
3) Sufficient Appropriate Corroborative Evidence
- Rely up => Sub test down
- Rely down => Sub test up

REPORTING STANDARDS:

1) Accord w/GAAP - explicit
2) No new principles - consistency observed
3) Ommitted disclosures - implicit
4) Expression of Opinion - “whole” = F/S + disclosures