biology

Generally Accepted Auditing Standards

Generally Accepted Auditing Standards is a biology topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Generally Accepted Auditing Standards rather than just read about it. In short: Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory.

Key takeaways

Generally Accepted Auditing Standards belongs to biology; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Generally Accepted Auditing Standards to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Generally Accepted Auditing Standards from memory before moving on to harder problems.

Reference excerpt

Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory. In the United States, the standards are promulgated by the Auditing Standards Board, a division of the American Institute of Certified Public Accountants (AICPA). AU Section 150 states that there are ten standards: three general standards, three fieldwork standards, and four reporting standards. These standards are issued and clarified Statements of Accounting Standards, with the first issued in 1972 to replace previous guidance. Typically, the first number of the AU section refers to which standard applies. However, in 2012 the Clarity Project significantly revised the standards and replaced AU Section 150 with AU Section 200, which does not explicitly discuss the 10 standards. In the United States, the Public Company Accounting Oversight Board develops standards (Auditing Standards or AS) for publicly traded companies since the 2002 passage of the Sarbanes–Oxley Act; however, it adopted many of the GAAS initially. The GAAS continues to apply to non-public/private companies.

General The examination is to be performed by a person or persons having adequate technical training and proficiency as an auditor. In all matters relating to an assignment, an independence in mental attitude is to be maintained by the auditor or auditors. Due professional care is to be exercised in the performance of the audit and the preparation of the report.

Standards of Field Work The auditor must adequately plan the work and must properly supervise any assistants. The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures. The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit.

Standards of Reporting The auditor must state in the auditor's report whether the financial statements are presented in accordance with generally accepted accounting principles. The auditor must identify in the auditor's report those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period. When the auditor determines that informative disclosures are not reasonably adequate, the auditor must so state in the auditor's report. The auditor must either express an opinion regarding the financial statements, taken as a whole, or state that an opinion cannot be expressed, in the auditor's report. When the auditor cannot express an overall opinion, the auditor should state the reasons therefore in the auditor's report. In all cases where an auditor's name is associated with financial statements, the auditor should clearly indicate the character of the auditor's work, if any, and the degree of responsibility the auditor is taking, in the auditor's report

Clarity Project In 2004, a project was begun to clarify and converge the standards with the International Standards in Auditing (ISAs). Many of the AU sections are being remapped as part of the Clarity Project. In October 2011, SAS 122 was issued which superseded all previous SASes except 51, 59, 65, 87, and 117-20. In the interim period, these new AU sections are referred to as AU-C until 2014. The AICPA provides a list of the AU-C standards.

ISAs International Standards on Auditing are stated by the International Auditing and Assurance Standards Board of the International Federation of Accountants. Derivatives of ISAs are used in the audit of several other jurisdictions, including the United Kingdom.

See also Statements on Auditing Standards in the United States INTOSAI standards for the audit of government entities, related to the International Standards on Auditing Comptroller General (disambiguation), Director of Audit (disambiguation)

References

Worked examples

Example 1 — a first encounter with Generally Accepted Auditing Standards

Start with the simplest possible case. Write down what Generally Accepted Auditing Standards claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In biology, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Generally Accepted Auditing Standards before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Generally Accepted Auditing Standards ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Generally Accepted Auditing Standards

In research: Generally Accepted Auditing Standards appears in biology research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Generally Accepted Auditing Standards in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Generally Accepted Auditing Standards is common in secondary-school and first-year university syllabi. It links to neighbouring topics Auditing, Auditing standards, so understanding it makes those chapters shorter.
In everyday life: Look for Generally Accepted Auditing Standards outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Generally Accepted Auditing Standards in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Generally Accepted Auditing Standards means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Generally Accepted Auditing Standards out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Generally Accepted Auditing Standards in simple terms?

Why does Generally Accepted Auditing Standards matter?

Because it connects several biology ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Generally Accepted Auditing Standards?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Generally Accepted Auditing Standards.