The Auditor Must Have Adequate Technical Training And Proficiency To Perform Accounting Essay

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I chose Section 200 - General Standards Accounting Principles, better known as Generally Accepted Auditing Standards (GAAS). They were developed by the AICPA in 1947 and have undergone minor changes since then. (4) These are sets of rules and guidelines promulgated by the AICPA's Auditing Standards Board. (1) Its auditing standards identify necessary qualification and characteristics of auditors and guide the conduct of the audit examination. [(2) p.39] Also, they are used by auditors when conducting audits on companies' finances, ensuring the accuracy, consistency and verifiability of auditors' actions and reports. (3)

The purpose is to meet the objectives of an audit examination, which have been identified as: to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, thereby enabling auditors to express an opinion on whether the financial statement are prepared, in all material respects, in accordance with an applicable financial reporting framework; and to report on the financial statements, and communicate as required by GAAS, in accordance with the auditor's findings. [(2). p.39]

II. Significance of GAAS for accountants

Its significance for accountants consists of the follows:

The auditor must have adequate technical training and proficiency to perform the audit.

The auditor must maintain independence in mental attitude in all matters related to the audit.

The auditor must exercise due professional care during the performance of the audit and the preparation of the report. (2) pag. 40

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. (6)

The auditors must conduct a GAAS audit to determine whether the company's financial statement are prepared according to GAAP. (2) p 39

III. Situations in an accounting practice that would make

the contents of GAAS particularly relevant

The CPAs employ GAAS in preparing for and performing audits of a client's financial statements. The guidelines include references to the auditor's qualifications (general standards), audit field work (statements of field work), and reporting the audit results (standards of reporting). The broad standards are backed by detailed interpretative literature. An auditor unable to express an opinion on the financial statements must give reasons. A CPA who does not conduct an examination in accordance with GAAS can be held in violation of the AICPA's Code of Professional Ethics and face legal action by affected parties. (7)

The GAAS serves as a financial tool whereby the individual, company or government agencies gather and create accurate reports for preparing tax forms, applying for business loans, bonding insurance, reporting to the board of directors or the general public. On the individual level, this process is simplified unless the person has a considerable amount of varied assets. For business owners having semi-annual compilation or reviewed statements enables them to prove to banks and insurance companies that they are financially viable. Government agencies are required by law to use this standard auditing practice to show the public how tax dollars are being utilized. (7)

When having financial statements compiled for a reviewed statement for the purposes of applying for a loan, bonding insurance or other insurance, it is recommended that a company use an outside CPA because an internal accountant may lack the objectivity and independence required to comply with GAAS.

GAAS serves as a means by which we can be protected from fraud by promoting accuracy in financial statements. These guidelines when adhered to give businesses, banks, government agencies and individuals the ability to make sound decisions.

IV. List of five sources that I intend to consul in researching

1. AICPA website

2. Duska, Ronald F., & Duska, Brenda Shay (2003). Accounting Ethics. Wiley-Blackwell

3. Timothy J. Louwers. 4 ed. Auditing & Assurance Services

4. NEC library,

5. Accounting textbooks

6. Online sources such as


(2)Timothy J. Louwers. 4 ed. Auditing & Assurance Services


(4)> Library > Business & Finance > Accounting Dictionary