Russell Generally Accepted Auditing Standards are set forth, so an auditor’s performance can be Judged against something. Since 2002 and the Introduction of the Serbians-Solely Act auditing requirements have undergone many changes. As the times and technology change so must the profession. Generally Accepted Accounting Standards (GAS) have 10 elements and are divided by three categories; general, field work and reporting. The first four elements fall under the general section.
They state things eke the need for an auditor’s technical training to perform an audit and that the auditor must maintain an Independence from the company he Is auditing. An auditor must also exercise professional care during the audit and the preparation of the report. Under the standards of field work are three more elements: Wherein it states that the auditor must plan its work adequately and supervise assistants. The auditor must also get a good understanding of the entity he is auditing, as well as have sufficient audit evidence to form and opinion toward the financial statements.
The hire section goes into standards of reporting and contains four elements; one of them requires the auditor to state whether or not a company follows Generally Accepted Accounting Standards (GAP)_ The auditor must also point out when a company strays from GAP. When the auditor determines that informative disclosures are not reasonably adequate, the auditor must so state in the auditor’s report. Lastly, the auditor must express an opinion in regards to the audited financial statements. Three types of audits There are three types of audits; financial, operational and compliance.
A financial audit Is an analysis of a company’s financial records and documentations and their integrity. Such and audit can be done at any level. Audits are Intended to show whether a company’s financial documentations matches its financial claims (owe, 2012). An operational audit is a performance audit. This audit evaluates a company’s operations, management performance and the conformity with policies and budgets. Its operations are analyzed, including appraisal of structure, controls, procedures and processes (Answers, 2012) A compliance audit Is a comprehensive review of an organization’s adherence to regulatory guidelines.
Independent accounting, security or IT consultants evaluate the strength and thoroughness of compliance preparations. Auditors review security polices, user access controls and risk management procedures over the course of a compliance audit. All audits must follow Generally Accepted Audit Standards (GAS) at all times. If and audit was not properly trained in any of these subjects it would be difficult to adhere to such standards and they would not be able to perform any audit. Changes since the In the aftermath of rampant unethical behavior such as Enron the Serbians-Solely
Act has brought about tighter restrictions in an effort to keep the profession upstanding. Auditors are restricted from personal relationships with the company they are auditing. Auditors are not allowed to do bookkeeping services for said company or work on accounting systems. Their auditing opinions are reported to the board of directors and management. If any risks are present they need to be described in detail with whatever changes need to occur for a clean report. The Security and Exchange Commission (SEC) must be informed should there be any issues with adherence. Public Company Accounting Oversight Board
The PEPCO is a not for profit organization established by Congress to oversee audits of public companies. It is concerned with the public and investor’s interest, so they may receive independent and accurate audit reports (Bayous. Org, 2012). The PEPCO has authority to investigate and discipline registered public accounting firms and persons associated with those firms for noncompliance with the Serbians-Solely Act of 2002, the rules of the PEPCO and the Securities and Exchange Commission, and other laws, rules, and professional standards governing the audits of public companies, brokers, and dealers.
When violations are found, the PEPCO can impose appropriate. As required by the Serbians-Solely Act, the Board’s investigations are confidential and nonpublic. The Serbians-Solely Act also requires that disciplinary proceedings are confidential and nonpublic, unless and until there is a final decision imposing sanctions”. Before this act auditors had the ability to control themselves and often worked for the interest of the company and not that of the public. Additional requirements have been placed on auditors. Auditors are required to submit annual reports of companies that were audited and any disciplinary actions ND or fees assessed.
Such reports need to be filed within thirty days. The BAOBAB has six additional auditing standards. These standards involve consistency of financial statements and changes in accounting standards. Any statement of disclosures require reporting. (Auditing Standards, 2010) Conclusion Because of the need for stricter rules imposed on Generally Accepted Accounting Standards, the Serbians-Solely Act of 2002 has been enforced and governing entities such as the PEPCO and the Security and Exchange commission have taken on responsibilities to enforce these rules for the benefit of the public and investors and ore accurately stated financial statements.