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GAAS, Category of Standards

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This file contains a formatted MS Word file containing an explanation for and an example of the GAAS Category of Standards.

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For your convenience, I have attached a formatted MS Word file containing the information below.

GAAS Category of Standards

Background

The following situations have caused you to become concerned about the quality of the upcoming external audit:

I. The audit will not begin until February, 2006, after the books have been closed, so the external auditors will not be able to confirm the accounts receivable cutoff, physically examine the inventory, and examine other important procedures.
II.You have just been advised that the auditing firm has been acquired by a larger auditing firm and that the auditor coming to TPC will be unfamiliar with TPC.
III.The acquiring auditing firm's principal partner is a cousin to the CEO of TPC.
IV.Some areas of control that have been of concern to the auditing department will not be audited due to workload and timing constraints.
V.Some of the methodology used in the accounting department to compile the financial statements may not comply with GAAP standards.

GAAS provides three categories of standards and 10 standards by which an audit should be performed. You are concerned that some of the listed situations may be in violation of the GAAS standards and have decided to review the GAAS standards to detect any possible violations.
List each of these standards in the correct category.

The three categories of generally accepted auditing standards that were developed by the American Institute of Certified Public Accountants (AICPA) are: 1) the General Standards, which apply to the auditor; 2) the Standards of Fieldwork, which apply to the conduct of the audit itself; and 3) the Standards of Reporting, which apply to the communication of the auditor's opinion. The underlying ten standards within these three categories are (Rittenberg and Schwieger, 2005, p.648):

GENERAL STANDARDS
1.The examination is to be performed by a person or persons having adequate technical training and proficiency as an auditor.
2.In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors
3.Due ...

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This file contains a formatted MS Word file containing an explanation for and an example of the GAAS Category of Standards.

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GAAS

explain the nature and functions of auditing.

Relate your explanation to the audit functions in your organization, or an organization with which you are familiar.

Address the following

· Describe the elements of the Generally Accepted Auditing Standards (GAAS).

· Describe how these standards apply to financial, operational, and compliance audits.

· Explain the effect that the Sarbanes-Oxley Act of 2002, and the Public Company Accounting Oversight Board (PCAOB), will have on audits of publicly traded companies.

· Discuss the additional requirements that are placed on auditors from this act and the actions of the PCAOB.

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