Febuary 23, 2015
Looking into the Generally Accepted Auditing Standards there are 10 different type of elements that is associated with the Generally Accepted Auditing Standards which are separated into three different categories such as the general standards, standards of field work, and standards of reporting. In the general standards categories you have three elements, the auditor must have technical training, maintain independence from the company throughout the audit, and use professional care in performance and reporting. There are three types of audits, financial, operational, and compliance. A financial audit covers the company’s financial records, and forming an opinion based on those and the organizations compliance with GAAP procedures. Operations audits, also known as a performance audit, reviews data concerning the organizations and examines for risks. As with a financial audit, they will render an opinion, but will often also share their findings directly with the board of directors also. The last type of audit is a compliance audit. A compliance audit examines both the financials and operations for the audited organization. Above numbers and risks, the compliance audit makes sure that the actions are within the laws, rules, and regulations of the industry. All of these audits are important for helping a company where they stand, and what areas need improvement, I know that my company has an annual financial audit, but could benefit from an operations audit of the whole company. An auditor needs to understand the company’s organizational environment, including their internal controls, to be effective. Auditors also need to make sure to gather all relevant information to the audit they are doing, this will enable them to give the most accurate opinion possible. They also need to check and verify that the company’s records are in compliance with the Generally Accepted Accounting Principles (GAAP), and report any variances. They must also report discrepancies between reporting periods, and verify the reasons for the changes.
Changes to Auditing The Sarbanes-Oxley Act (SOX), of 2002, brought many changes to the ways that public companies handled their financial records, and the relationships that they could have with external auditors. SOX also prevents auditors from working with the companies accounting systems, or in any way help with the organizations financial records. All of the auditor’s opinions are to be given to the board of directors, with details explaining their opinion. Any operations risks are reported in detail, along with all required changes to receive full assurance. Another change, though created by SOX, is the Public Companies Accounting Oversight Board (PCAOB). The PCAOB was created to oversee all audits of public companies, and to…