GAAS stands for Generally Accepted Auditing Standards which are are a set of systematic guidelines used by auditors when conducting audits of companies' financial records. GAAS helps ensure the accuracy, consistency, and auditability of auditors' actions and reports. The Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) created GAAS.
What is GAAS?
GAAS are the auditing standards that help measure the quality of audits. Auditors review and report on companies' financial records in accordance with generally accepted auditing standards.
Auditors are responsible for determining whether the financial statements of public companies comply with generally accepted accounting principles (GAAP). GAAP is a set of accounting standards that companies must follow when reporting their financial statements. Auditors review a company's financial statements and accounting practices to ensure they are consistent and in accordance with GAAP. The Securities and Exchange Commission (SEC) requires that public company financial statements be audited by outside, independent auditors.
In the United States, the Public Company Accounting Oversight Board has been developing standards (Auditing Standards or AS) for public companies since the passage of the 2002 Sarbanes-Oxley Act; however, it initially adopted many of the GAAS. GAAS continues to apply to non-public companies.
GAAS: General points
The audit should be carried out by a person or persons with appropriate technical training and qualifications as an auditor.In all engagement-related matters, the auditor or auditors should maintain independence of mind.Due professional care should be exercised in conducting the audit and preparing the report.
GAAS Field Work Standards
The auditor must adequately plan the work and properly supervise any assistants.The auditor should obtain a sufficient understanding of the entity and its environment, including its internal controls, to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and to develop the nature, timing and extent of any further audit. procedures.The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to provide a reasonable basis for expressing an opinion on the financial statements being audited.
GAAS Reporting Standards
The auditor must state in the auditor's report whether the financial statements have been prepared in accordance with generally accepted accounting principles.The auditor is required to state in the auditor's report the circumstances in which these principles have not been consistently complied with in the current period compared to the previous period.If the auditor determines that informational disclosures are not appropriate, the auditor must state this in the auditor's report.The auditor must either express an opinion on the financial statements as a whole or state that an opinion is not available in the auditor's report. If the auditor is unable to give an overall opinion, the auditor should justify this in the auditor's report. In all cases where an auditor's name is associated with financial statements, the auditor should clearly state in the auditor's report the nature of the auditor's work, if any, and the level of responsibility the auditor assumes.
GAAP - National Accounting Standards
The abbreviation GAAP is an abbreviation for Generally accepted accounting principles, which translates as "generally accepted accounting principles." This refers to the principles applied in a particular country. That is, GAAP standards are accounting rules generally accepted for national economies.
Since each country has its own fundamental accounting principles, GAAP standards differ from each other. In their name, this difference is reflected in the appearance of additional letters before the GAAP abbreviation, indicating belonging to a particular country. For example:
UK GAAP - UK standards;US GAAP - US standards.