Professional Standards A1 M1

Question 1

What is Generally Accepted Audit Standards (GAAS)?

Answer 1

Measures Auditor’s quality of performance and provides guidance to the auditor.

Question 2

What to do if you use more than one set of standards boards? (GAGAAS and GAAS) for example.

Answer 2

The auditor should add additional language to the Basis for Opinion paragraph to state that the audit was conducted in accordance with both sets of auditing standards.

Question 3

What are the different Governance Boards?

Answer 3

The Auditor:

1. Public Companies Auditing Oversights Board (PCAOB) same as Sarbanes Oxley 2002 (SOX): Issuer standards board; the most authoritative level of auditing guidance for audits of issuers.
2. Statement Auditing Standards (SAS) or Auditing Standards Board ASB the most authoritative level of auditing guidance for audits of non-issuers.
3. Generally Accepted Auding Standards (GAAS): for us provides guidance on how to perform the audit
4. Governmental Auditing Generally Accepted Auditing Standards (GAGAAS);
5. Statements on Quality Control Standards (SQCS): issued by ASB and provides guidance on Quality Control (QC).
6. International Standards on Auditing (ISA) vs. or including GAAS when conducting audits from the U.S. for clients in another country in the basis of opinion section.

The Management or Client

1. Financial Accounting Standards Board (FASB) issues guidance on how to apply GAAP.
2. Generally Accepted Accounting Principles (GAAP). It explains Accounting Standards at a moment in time as it constantly changes.
3. International Financial Reporting Standards (IFRS)

Question 4

Which verb means must do without fail that is used in auditing standards?

Answer 4

1. Must; unconditionally must do.
2. Should; presumptively mandatory, should follow as the guideline except in rare circumstances.
3. Might, May, and Could; auditor should consider.
4. Sufficient Appropriate = Requirement for audit evidence
5. Reasonable = the type of assurance gained by the auditor as a basis for opinion.

Question 5

What is the order of authoritative sources for an Auditor to follow?

Answer 5

1. PCAOB Issuers or SAS Non-issuers
2. Standards Boards Interpretations
3. Authoritative literature AICPA Journal of Accountancy, etc..

Question 6

What are the different standards boards?

Answer 6

AUDITS

• AICPA ASB/ SAS/ AU-C’s - Non-Issuers
• PCAOB / GAAS/ PCAOB AS - Issuers
• GAO/ GAGAAS - Governmental Entities

OTHER ENGAGEMENTS

• AICPA / SSAE/ AT-C/ examination, review, AUP’s on subject matter or assertion with responsibility of others

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• AICPA ACCOUNTING AND REVIEW SERVICE COMMITTEE/ SSARS/ AR-C guidance for unaudited financials or info. of non-issuers/ Preparations, Compilations, and Reviews of historical financials Pro forma financial information and forecast of non-issuers

GUIDELINES

• AICPA/ ET/ Code of Professional Conduct
• AICPA/ QC/ Statements on Quality Standards SQCS