Generally Accepted Auditing Standards

Generally Accepted Auditing Standards Paper
The assignment is to explain the nature and functions of auditing by describing the elements of the Generally Accepted Auditing Standards (GAAS) and how they apply to financial, operational, and compliance audits. Also included is an explanation of the effect and additional requirements placed on auditors by the Sarbanes-Oxley Act and the Public Company Accounting Oversight Board (PCAOB) on publicly traded companies.
Generally Accepted Auditing Standards
There are 10 broad standards, which include three general standards for the individual auditor, three standards for field work, and four standards for reporting. The individual auditor must have technical education in accounting and auditing. Auditors are required to be independent from the client and to exercise due professional care while performing the audit.
The standards of field work require the work to be properly planned and any assistants must be properly supervised. The auditor needs to understand the environment and its process of internal control. Sufficient competent evidence is required to support the opinions regarding the financial statements.
The report must refer to GAAP unless there is a special provision if a company uses a different basis of accounting. The auditor is required to mention inconsistencies in following GAAP from period to period. If there has been a change in accounting principles or if management’s notes are inadequate, that must be noted in the auditor’s report. Finally, the auditor is to state their opinion on the financial statements or to state an opinion cannot be expressed. (Boynton & Johnson, 2006)

Application of Standards to Audits
The purpose of a financial audit is to determine if the financial statements of an entity are prepared according to GAAP. Management is responsible for preparing the documents, and the