Auditing Standards


Auditing Standards
Teaching auditing has become considerably more complicated now that we have two sets of auditing standards – ASB standards for audits of private companies and PCAOB standards for audits of public companies. I present the ASB version of the 10 generally accepted auditing standards because I like the revised wording better than the old wording retained by the PCAOB. The temptation is to use ASB standards to talk about the financial statement audit and mention PCAOB standards only when talking about the S-Ox 404 requirement to report on internal controls. But this could create the impression that auditing the financial statements and auditing the internal controls are two separate processes while PCAOB AS No. 5 specifically requires an integrated audit. Therefore, I prefer to describe the entire audit process in terms of PCAOB standards. 

Because my students have studied differences between US GAAP and IFRS in their accounting classes, they often ask me if significant differences exist between US GAAS and international auditing standards. I point them to the WebCPA (August 21, 2009) article cited below and explain that the differences are minor at this time. The Lindberg & Seifert (CPA Journal, April 2011) article describes five principal differences between US GAAS, PCAOB auditing standards, and International Standards on Auditing.


“Clarified Auditing Standards: The Quiet Revolution,” Jan Taylor Morris & C. William Thomas, Journal of Accountancy (June 2011): 24-28. This article describes significant changes arising from the ASB’s Clarity Project including changes in the status of the 10 generally accepted auditing standards, the wording of the auditor’s report, and standards for group audits.

“Federal Oversight Board Wants to Write Auditing Standards,” Carrie Johnson, Washington Post (April 17, 2003): E1.
The PCAOB decides to take standard-writing duties from the AICPA.

“U.S. Accounting Group to Focus on Private Audits,” Reuters News (April 28, 2003). The AICPA will continue to write standards for audits of private companies after the PCAOB takes over writing standards for public company audits.

“AICPA Expands Membership on Auditing Standards Board,” Business Wire (October 20, 2003). Membership on the ASB expands to 19 members and includes federal regulators and financial statement users.

International Auditing Standards:
“International Auditing Standards Spread to 126 Countries,” WebCPA (November 3, 2009). IFAC reports that International Standards of Auditing (ISAs) have been adopted or used as the foundation for national auditing standards in 126 countries.

“Auditing Standards Don’t Have Far to Converge,” WebCPA (August 21, 2009). A recent study of US GAAS and International Standards of Auditing (ISA) concludes that differences are minor except for the PCAOB requirement that auditors report on internal controls over financial reporting.

“A Comparison of U.S. Auditing Standards with International Standards on Auditing,” Deborah Lindberg & Deborah Seifert, CPA Journal (April 2011): 17-21. This article describes five principal differences between US GAAS, PCAOB auditing standards, and International Standards on Auditing.


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