Wiley Practitioner's Guide to GAAS 2021

Covering all SASs, SSAEs, SSARSs, and Interpretations

Joanne M. Flood

• Publisher: Wiley
• Year: 2021
• ISBN:
  9781119789666
• Edition: 2
• Topic: Negocios y empresa
• Subtopic: Auditoría

Wiley PRACTITIONER'S GUIDE TO GAAS

Stay up to date on critical auditing standards, practices, and procedures with this comprehensive 2021 guide

The American Institute of Certified Public Accountants' recent clarifications of all its professional standards and newly issued standards pose new compliance challenges for accounting professionals across the United States. And, it's more important than ever to ensure you're up to date with all applicable guidelines, rules, and regulations.

The Wiley Practitioner's Guide to GAAS 2021 delivers a thorough description and analysis of all SASs, SSAEs, SSARSs, and Interpretations necessary for you to fully understand all the latest professional standards. The guide offers all the most recent revisions to the standards and explains them clearly and accurately, providing explicit guidance on how to conduct your engagements efficiently, effectively, and properly.

You'll get helpful and practical direction on how to do your job as an accountant or auditor and save time by accessing all the info you need in a single, one-stop resource. You'll discover how to organize yourself using the Statements on Auditing Standards, comprehensive guidance on the entirety of the auditing process, and explanations of all attestation and review, compilation, and preparation standards.

Perfect for accountants and auditors who demand efficient and practical access to the information they need on a daily basis, The Wiley Practitioner's Guide to GAAS 2021 is an invaluable resource written from the ground up to save you time and simplify your compliance with professional standards.

1
AU‐C 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Generally Accepted Auditing Standards

1. Scope
2. Definitions of Terms
3. Objectives of AU-C Section 200
4. Requirements
   1. Management’s Responsibilities
   2. Auditor’s Objectives
   3. Ethical Requirements
   4. Professional Judgment and Skepticism
5. Complying with GAAS
   1. GAAS and the GAAS Hierarchy

SCOPE

AU‐C 200 describes the auditor's overall responsibilities when conducting a GAAS audit, including the auditor's overall objectives and the nature and scope of the audit. Also included in AU‐C 200 are the scope, authority, and structure of GAAS. (AU‐C 200.01)

DEFINITIONS OF TERMS

Source: AU‐C 200.14. For definitions related to this standard, see Appendix A, “Definitions of Terms”: Applicable financial reporting framework, Audit evidence, Audit risk, Auditor, Detection risk, Financial reporting framework, Financial statements, Historical financial information, Interpretive publications, Management, Misstatement, Other auditing publications, Premise, relating to the responsibilities of management and, when appropriate, those charged with governance, on which an audit is conducted (the premise), Professional judgment, Professional skepticism, Reasonable assurance, Risk of material misstatement, Those charged with governance.

OBJECTIVES OFAU‐C SECTION 200

The overall objectives of the auditor, in conducting an audit of financial statements, are to

1. obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with an applicable financial reporting framework; and
2. report on the financial statements, and communicate as required by GAAS, in accordance with the auditor's findings.

• (AU‐C 200.12)

If reasonable assurance cannot be obtained and a qualified opinion is insufficient, the auditor must either disclaim an opinion or withdraw from the engagement when possible under applicable law or regulation. (AU‐C 200.13)

REQUIREMENTS

MANAGEMENT'S RESPONSIBILITIES

Financial statements are prepared by management with oversight from those charged with governance. GAAS do not impose requirements on management or those charged with governance, but rather an audit is conducted on the premise that management and those charged with governance understand their responsibilities. (AU‐C 200.05)

Many times clients do not understand their responsibilities for audited financial statements. The financial statements are management's. They contain management's representations. The form and content of the financial statements are management's responsibility, even if the auditor prepared them or participated in their preparation.

Management also is responsible for implementing and maintaining an effective system of internal control.

AUDITOR'S OBJECTIVES

The purpose of an audit of financial statements is confined to the expression of an opinion on the financial statements being audited. In performing the audit, the auditor is responsible for compliance with GAAS. (AU‐C 200.04)

In every audit, the auditor has to obtain reasonable assurance¹ about whether the financial statements are free of material misstatement, whether due to errors or to fraud. (AU‐C 200.06) Materiality is taken into account when planning and performing the audit. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. However, the auditor is not required to obtain reasonable assurance that misstatements not material to the financial statements taken as a whole, whether caused by fraud or error, are detected. Materiality considers qualitative and quantitative elements and should be viewed in context. (AU‐C 200.07)

The auditor has a responsibility to consider GAAS in all audits. For more information, see the section “Complying with GAAS” later in this chapter.

To provide reasonable assurance that it is conforming with generally accepted auditing standards in its audit engagements, an accounting firm should establish quality control policies and procedures. These policies and procedures should apply not only to audit engagements but also to attest any accounting and review services for which professional standards have been established. (AU‐C 200.A20) The AICPA's Quality Control Standards detail the firm's responsibility for establishing and maintaining a system of quality control for auditors. See QC Section 10, A Firm's System of Quality Control, for more information.

ETHICAL REQUIREMENTS

The auditor must be independent. If not independent, the auditor cannot issue a report under GAAS. The only exception is if GAAS provides otherwise or law or regulation requires the auditor to accept the engagement and report on the financial statements. (AU‐C 200.15) In that situation, AU‐C 705, Modifications to the Opinion in the Independent Auditor's Report, applies.

To be independent, the auditor must be intellectually honest; to be recognized as independent, he or she must be free from any obligation to or interest in the client, its management, or its owners. The audit...