This is a discussion that focuses on GAAP and GAAS standards of auditing. It is a write up that tackles important factors in the auditing field and ensures that there is an emphasis on following the preset standards in auditing and confidence in opinion of the audit. It also touches on the possible situations where an auditor may get into trouble with the law because of lack of confidence in the audit.
Generally Accepted Accounting Principles (GAAP) are the standard guidelines used in financial accounting across all jurisdictions. In other words, these are known as accounting standards.
Generally Accepted Auditing Standards (GAAS) are standards on which audits are performed and judged.
It is indeed true that an auditor’s report is an opinion of his or her findings on the company being audited. There are some dynamics that come up and in some cases; auditors may be held liable for some things. In some cases, an opinion is subjectively false but objectively true. In an analysis of the opinion at issue, a statement of opinion contains subjective and objective apparatus. This is to say that the creator holds the beliefs stated and the subject of the beliefs expressed. However, the conclusion to this matter is that statements of opinion are not actionable under federal laws.
The management of a company and not the auditor are responsible for information included in the financial statements. This includes any accounting policies and most importantly GAAP compliance. It is important to understand that an independent auditor does not prepare financial statements. He simply audits the statements prepared by the company. An audit is an inspection that is done according to compliance laws and GAAS standards. The auditor establishes the truthfulness of the statements through his or her audit report. It is important to note that at the end of the audit, the auditor supplies a report that is based on the core factors of professional accounting. This is addition to application of various professional standards. The final report is the full process of complexity, which involves judgment, discretion and professionalism in every point of