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Summary of The 10 Generally Accepted Auditing Standards (GAAS)

The document summarizes the 10 generally accepted auditing standards (GAAS) and provides more detail on key aspects of engagement planning. It notes that the standards can be remembered as TIP, PIE, and GODC. It then discusses general standards around training and proficiency, independence, and professional care. It also covers understanding the client's operations, communicating with predecessors, establishing an understanding with the audit committee, and communicating during and after the audit. The overall focus is on important considerations for planning and acceptance of an audit engagement.

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Hazem El Sayed
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127 views2 pages

Summary of The 10 Generally Accepted Auditing Standards (GAAS)

The document summarizes the 10 generally accepted auditing standards (GAAS) and provides more detail on key aspects of engagement planning. It notes that the standards can be remembered as TIP, PIE, and GODC. It then discusses general standards around training and proficiency, independence, and professional care. It also covers understanding the client's operations, communicating with predecessors, establishing an understanding with the audit committee, and communicating during and after the audit. The overall focus is on important considerations for planning and acceptance of an audit engagement.

Uploaded by

Hazem El Sayed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as RTF, PDF, TXT or read online on Scribd
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Summary of the 10 Generally Accepted Auditing Standards


(GAAS)

T -Training and Proficiency


I-Independence
P-Professional Care
P-Planning and Supervision
I-Internal Control
E-Evidential Matter
G-Generally Accepted Accounting Principles
O-Opinion
D-Disclosures
C-Consistency

The Standards spell out TIP, PIE, and GODC (the reporting standards are ordered
1, 4, 3, 2 for GOD and a soft-c to sound like gods)

Focus on
Engagement Planning - Module 1 4

Accepting the Engagement


Compliance with General Standards
1) Training & proficiency results from education & auditing experience
2) Independence required in both fact & appearance
 Independence in fact includes
 I ntellectual honesty
 No direct financial interest in client
 No material indirect financial interest
3) Due professional care
 Observation of standards of fieldwork & reporting
 Critical review at every level of supervision
Exercise professional skepticism
 Obtain reasonable assurance

Focus on
Engagement Planning - Module 1 5

Understanding of Client's Operations, Business, «


Industry

Auditor must have understanding or be able to obtain it prior to commencing the engagement
Avoid association with client whose management lacks integrity

Procedures prior to acceptance


 Review client's financial statements
 Make inquiries of third parties such as client's attorneys & creditors
 Communication with predecessor auditor

Focus on
Engagement Planning - Module 1 6

Communication with Predecessor Auditor

Successor must make inquiries of predecessor auditor before accepting engagement


 Successor initiates communication
 Requires permission of client
 Consider implications of client's refusal
Nature of inquiries
 Disagreements with management about audit procedures or accounting
principles
 Communication with audit committee about fraud, illegal acts, or internal
control
Reason for change in auditor
 Integrity of management

Focus on
 Engagement Planning - Module 1 7

Audit Committee

 Directors that are not officers or


employees
Liaison between auditor & board of directors

Audit committee
 Oversees financial reporting and disclosure
process
Hires auditor
 Reviews audit plan
 Reviews results & financial statements
 Oversees adequacy of internal control
Auditor & audit committee agree on
 Timing, fees, & responsibilities of parties
 Overall audit plan

Focus on
Planning - Module 1 8

Communication during « after Audit


Communication about the audit
 The auditor's responsibilities under GMS
 Selection of & changes to accounting policies (may be communicated by
management)
Management's process for estimating (may be communicated by management)
Adjustments proposed by auditor
 Auditor's judgment about the quality of entity's accounting principles

 Auditor's responsibility for information in documents containing audited financial


state-
ments
Disagreements with management
 Management's consulting other accountants about accounting matters

 Items discussed with management prior to being


retained
Difficulties encountered in performing the audit

Focus on
Engagement Planning - Module 1 9

9
7

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