Saturday, 28 December 2019

Unit 2: Auditing Standards and IFRS

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Unit 2: Auditing Standards and IFRS

Generally Accepted Accounting Principles (GAAP) is defined as the standard guidelines of accounting rules for financial accounting and to prepare financial statements for private companies and the companies trading publicly in United States.

It chalks down the standards, conventions, and rules for accountants to pursue in recording and summarizing transactions, and in the preparation of financial statements.

In United States these rules are decided by the Governmental Accounting Standards Board (GASB) which applies to local and state governments.

The looming decisions about the future of accounting standards in the United States involve complex and challenging questions.

While there are significant benefits for investors, businesses, and the entire economies of having all nations move to a single, uniform set of high-quality accounting standards, there are a number of considerations that need to be evaluated in making such a transition.

   Advanced Auditing Notes   IFRS is a dynamic — and fast evolving — issue.

To keep current with developments regarding global accounting standards, the following websites include information about the development of IFRS, the convergence efforts between the FASB and the IASB, and the acceptance of IFRS around the world.

Again, it has to be remembered that GAAP are not a rigid set of rules.

These are flexible guidelines only.

Over the years, these groups of conventions and standards have evolved in the specific need of standard common platform for the preparation and presentation of financial statements.

In United States, the American Institute of Certified Public Accountants (AICPA), The Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) offer guidance and assistance about standard acceptable practices of accounting.


Audit: An official inspection of an individual's or organization's accounts, typically by an independent body.

Auditing Standards: The mandatory examination procedures to be executed during an audit to ensure consistency of findings.


GAAP: Generally Accepted Accounting Principles (GAAP) is defined as the standard guidelines of accounting rules for financial accounting and to prepare financial statements for private companies and the companies trading publicly in United States.

ISAE: International Standards on Assurance Engagements.


ISQC: Standards on Quality Control.

ISRE: International Standards on Review Engagements.

ISRS: International Standards on Related Services.

Quality: The standard of something as measured against other things of a similar kind.

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