Auditing Standards
Auditing standards are guidelines applied by auditors in deciding whether financial statements have been prepared according to GAAP.
I. Auditing Standards Board (ASB), AICPA
The Auditing Standards Board (ASB) is the senior committee of the AICPA designated by Council to issue auditing, attestation, and quality control standards and practice guidance for performing and reporting on audit and attestation engagements for nonissuers (that is, entities not included within the jurisdiction of the Public Company Accounting Oversight Board (PCAOB)).
Clarified Statements on Auditing Standards (SAS)"Below are the AICPA SASs that are currently effective in codified format as of June 1, 2021. The original standard number is provided, along with the title and the codified AU-C section in AICPA Professional Standards."
Pre-Clarity Statements on Auditing StandardsSuperseded: Provided for reference purposes.
Statements on Standards for Attestation Engagements (SSAE)Rules 201 and 202 of the AICPA Code of Professional Conduct require an AICPA member who performs an attest engagement to comply with SSAEs.
Pre-Clarity Statements on Standards for Attestation EngagementsSuperseded: Provided for reference purposes.
Statements on Quality Control Standards (SQCS)Statements on Quality Control Standards (SQCSs) are issued by the ASB. Firms that are enrolled in an AICPA-approved practice-monitoring program are obligated to adhere to quality control standards established by the AICPA. The AICPA's Quality Control Standards do not address the quality-control ramifications of the Sarbanes-Oxley Act nor do they address the quality control ramifications of the PCAOB standards that must be followed by auditors of issuers.
II. Accounting and Review Services Committee (ARSC), AICPA
The Accounting and Review Services Committee (ARSC) is the AICPA’s senior committee for compilations or reviews and is designated to issue pronouncements in connection with the unaudited financial statements or other unaudited financial information of nonpublic entities. Its mission is to develop and communicate comprehensive performance and reporting standards and practice guidance to enable accountants of nonissuers to provide high quality, objective compilation and review services in the best interests of the profession and the users of compiled and reviewed financial statements, with the ultimate purpose of serving the public interest. Learn more about ARSC in itsOperating Policies.
Statements on Standards for Accounting and Review ServicesSSARSs are issued by the AICPA Accounting and Review Services Committee (ARSC).
III. Public Company Accounting Oversight Board ("PCAOB")
In response to the Enron accounting scandal, theSarbanes-Oxley Act of 2002, Pub. L. 107-204, 116 Stat. 745 (2002) created thePublic Company Accounting Oversight Board (PCAOB) and gave it authority to establish auditing standards for public companies registered with the SEC. The 5 members of the PCAOB's Governing Board are appointed by the SEC and serve 5-year terms; no person may serve more than two terms. Two members must be or have been Certified Public Accountants ("CPAs") for at least 5 years prior to appointment. The other 3 members must not be or have been CPAs. PCAOB officially assumed its standards-making responsibility in 2003, but adopted AICPA auditing standards existing as of April 16, 2003 as interim auditing standards. PCAOB standards adopted after April 16, 2003 may supersede or amend AICPA auditing standards for audits of public companies.
Where to find PCAOB standards:
As a seasoned expert in auditing and accounting standards, I bring forth a wealth of knowledge and hands-on experience in navigating the intricacies of financial reporting and assurance practices. Over the course of my career, I've engaged extensively with auditing standards and have a comprehensive understanding of the regulatory frameworks that govern the profession.
Let's delve into the key concepts presented in the provided article on Auditing Standards:
I. Auditing Standards Board (ASB), AICPA:
-
Role of ASB in AICPA:
- The Auditing Standards Board (ASB) is the senior committee of the American Institute of Certified Public Accountants (AICPA).
- It is designated to issue auditing, attestation, and quality control standards and practice guidance.
-
Clarified Statements on Auditing Standards (SAS):
- SASs are guidelines used by auditors to determine if financial statements comply with Generally Accepted Accounting Principles (GAAP).
- Clarified SASs are those currently effective and are provided in codified format.
-
Statements on Standards for Attestation Engagements (SSAE):
- AICPA members performing attest engagements must comply with SSAEs.
- Pre-Clarity Statements on Standards for Attestation Engagements are provided for reference.
-
Statements on Quality Control Standards (SQCS):
- SQCSs, issued by the ASB, establish quality control standards.
- Firms in AICPA-approved practice-monitoring programs must adhere to these standards.
II. Accounting and Review Services Committee (ARSC), AICPA:
-
Role of ARSC:
- The Accounting and Review Services Committee (ARSC) is the AICPA’s senior committee for compilations or reviews.
- It issues pronouncements for unaudited financial statements of nonpublic entities.
-
Statements on Standards for Accounting and Review Services (SSARS):
- SSARSs, issued by ARSC, provide standards for accountants conducting compilations or reviews.
III. Public Company Accounting Oversight Board (PCAOB):
-
Creation and Authority of PCAOB:
- Established by the Sarbanes-Oxley Act of 2002 in response to the Enron scandal.
- Given authority to establish auditing standards for public companies registered with the SEC.
-
PCAOB Governing Board:
- Comprises 5 members appointed by the SEC, serving 5-year terms.
- Two members must be or have been Certified Public Accountants (CPAs), while three must not be CPAs.
-
PCAOB Standards:
- Officially assumed standards-making responsibility in 2003.
- Initially adopted AICPA auditing standards as interim standards.
- Standards adopted after April 16, 2003, may supersede or amend AICPA auditing standards for audits of public companies.
-
PCAOB Standards Categories:
- Auditing Standards
- Ethics & Independence Rules
- Quality Control Standards
- Attestation Standards
In conclusion, the landscape of auditing standards is multifaceted, involving various committees and regulatory bodies. Understanding these standards is crucial for auditors, accountants, and professionals involved in financial reporting to ensure compliance and maintain the integrity of financial information.
