Nt1310 Unit 1

‘There has been a worldwide demand from regulators, investors, businesses, and auditing firms for a single set of high-quality, globally-accepted accounting standards. The American Institute of CPA’s (AICPA) believes U.S. adoption of a single set of high-quality, globally accepted accounting standards will benefit U.S. financial markets and public companies by enabling preparation of transparent and comparable financial reports throughout the world” (aicpa.org).

Under the Generally Accepted Auditing Standards (GAAS) there are three sections, General Standards, Standards of Fieldwork, and Standards of Reporting. Under

Since auditors are not responsible for the actual financial statements, only the authenticity of them, as you stated, the more

2. A financial statement audit involves obtaining and evaluating evidence about an entity 's financial statements for the purpose of expressing an opinion on whether the statements are presented fairly in conformity with established criteria--usually GAAP. Thus, the nature of the auditor 's

The U.S. GAAP represents the set of accounting principles that strictly abide by the laws and regulations. The U.S. GAAP, also known as, Generally Accepted Accounting Principles, encompass the legal norms, complex mechanisms and through details for corporate accounting. The U.S. GAAP standards are often perceived as building blocks for the decisions taken by FASB, also known as, Financial Accounting Standards Board. GAAP served as a legal and regulatory standard for the companies operational and listed on the stock exchanges in the United States.

Generally accepted auditing standards are ten general guidelines to aid auditors in fulfilling their professional responsibilities. These guidelines include three general standards concerned with competence, independence, and due professional care; three standards of field work including planning and supervision, understanding the entity and its environment, including its internal control, and the gathering of sufficient appropriate evidence; and four standards of reporting, which require a statement as to presentation in accordance with generally accepted accounting principles, inconsistency observed in the current period in relation to the preceding period, adequate disclosure, and the expression of an opinion as to the fairness of the presentation of the financial statements.

Numerous oversight organizations implement and monitor the generally accepted accounting principles, also referred to as GAAP, of their individual countries. GAAP are in place to maintain a level of consistency between the reports of individual firms, Issues arise, however when a company operates in several countries. To address these problems, the International Accounting Standards Board (IASB) developed the International Financial Reporting Standards, or IFRS.

The Generally Accepted Auditing Standards refers to standards that are used to audit Private Corporations (Sunder, 2010 P. 100). The standards are divided into three categories. The categories include; fieldwork standards, reporting standards as well as general standards. The general standards address the individual’s qualifications to become an auditor as well as the minimum standards for the work product. According these standards, an auditor must have adequate proficiency and training, must be independent in appearance and facts and must have the ability to exercise the necessary professional care while performing the auditing tasks (Hail, Leuz &

Reporting disclosure is one of the IFRS principles that state that each firm is required to present information for certain parties or the management. Only adequate and full disclosure of such information will give management the ability to make appropriate decisions. It is, therefore, advised that the accountants disclose too much information than too little. In perspective to the IAS, depending on the nature of the firms, the disclosure of this kind of information should be shown in the financial statements notes. Full disclosure is very important because an auditor uses the notes and other financial documents in doing an audit. In addition full disclosure is also one of the legal requirements.

In the United States, Generally Accepted Accounting Principles (GAAP) outlines for accountants the acceptable practices regarding the preparation of financial statements. GAAP, developed by the Financial Accounting Standards Board (FASB) and known for being more "rules-based," specifies the presentation of financial data on the balance statement, income statement, and statement of cash flows. While certain circumstances allow for deviation from GAAP, those deviations must be disclosed. Internationally, accounting standards are under the eye of the International Accounting Standards Board (IASB) and referred to as International Financial Reporting Standards (IFRS), which is known for being "principles-based"

Further in the AU-C 200 document one will find the ethical requirement for auditing, and assurance. The Auditing Standards Board (ASB) and the Generally Accepted Auditing Standards(GAAS) are written with the standards of the International Standards on Auditing (ISAs), which was issued by the International Auditing and Assurance Standards Board (IAASB). So the ASB, GAAS, and IAASB are the main standards setters for auditing and assurance services.

The International Accounting Standards Board (IASB) is the premier accounting standards setting body used in over 120 countries worldwide, comprised of 14 experts appointed from the international community (Members of the IASB, 2016). They set the conditions for those that fall under their jurisdiction through publications from the principle-based International Financial Reporting Standards (IFRS). These conditions include, though not limited to, a company’s financial statements. In the United States, there are many different groups that influence the accounting perspective, boiling down to a rule-based comprehensive framework called Generally Accepted Accounting Principles (GAAP). Groups that influence GAAP is the Securities and Exchange Commission, who oversee all publically traded firms’ financial statements in the United States.

Two years later, the AICPA joined with its Canadian and United Kingdom counterparts to investigate and compare the diverse accounting standards. They continued to meet into the mid-1970s, and published results of their findings and opinions on best practices. Then in 1973, the AICPA and its equivalents in 8 countries formed the International Accounting Standards Committee (IASC), in order “to formulate and publish, in the public interest, basic standards to be observed in the presentation of audited accounts and financial statements and to promote their worldwide acceptance” (FASB).

Accounting standards are guidelines for valuing and reporting every item in the financial statements. US GAAP is a rules-based accounting framework. This type of framework follows a strict set of rules that are to be followed when accountants are preparing financial statements. IFRS are principle-based standards which provide a framework for decision making rather than provide specific guidelines as the US GAAP. It is not clear on the possibility of the IFRS evolving into rules-based standards until they are thoroughly scrutinized by both practitioners and the judicial system. IASB

When accountants are preparing a set of financial statements accountants must comply with the relevant accounting rules.