1. The Ten Generally Accepted Auditing Standards
Dr. Donald K. McConnell Jr.
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2. Background on GAAS Three General Standards
Three Standards of Field Work
Four Standards of Reporting
Largely Unchanged Since Late 1940’s
First General Standard and the Standards of Field Work Were Recently Revised [SAS 105]
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3. First General Standard
The audit must be be performed by a person or persons having adequate technical training and proficiency as an auditor.
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4. Second General Standard
In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors.
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5. Third General Standard
Due professional care is to be exercised in the planning and performance of the audit and the preparation of the report.
Note especially definitions of:
Professional skepticism (Au )
Reasonable assurance (Au )
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6. First Standard of Field Work
The auditor must adequately plan the work and must properly supervise any assistants.
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7. Second Standard of Field Work
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.
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8. Third Standard of Field Work
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
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9. First Standard of Reporting
The report shall state whether the financial statements are presented in accordance with generally accepted accounting principles
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10. Second Standard of Reporting
The report shall identify those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period
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11. Third Standard of Reporting
Informative disclosures in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report
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12. Fourth Standard of Reporting
The report shall contain either an expression of opinion regarding the financial statements, taken as a whole, or an assertion to the effect that an opinion cannot be expressed. When an overall opinion cannot be expressed, the reasons therefore should be stated. In all cases where an auditor’s name is associated with financial statements, the report should contain a clear-cut indication of the character of the auditor’s work, if any, and the degree of responsibility the auditor is taking.
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13. Various Issues
Statements on Auditing Standards (SAS’s) are considered to be interpretations of the 10 GAAS’s
Consequences of Violating GAAS
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