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Simple English definitions for legal terms
generally accepted auditing standards
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A quick definition of generally accepted auditing standards:
Generally Accepted Auditing Standards (GAAS) are guidelines created by the American Institute of Certified Public Accountants that outline the qualities a professional auditor should possess and the criteria they should use when examining financial statements. These standards help ensure that audits are conducted with integrity, objectivity, and due care, and that the resulting reports are accurate and reliable. In simpler terms, GAAS are rules that auditors follow to make sure they do their job well and provide trustworthy information about a company's finances.
A more thorough explanation:
Generally Accepted Auditing Standards (GAAS) are guidelines established by the American Institute of Certified Public Accountants (AICPA) that outline the professional qualities an auditor must possess and the criteria for conducting an audit and preparing reports.
These standards are used to ensure that audits are conducted with integrity, objectivity, and independence, and that the resulting reports are accurate and reliable.
- Independence: Auditors must be independent of the company being audited, meaning they have no financial or personal interest in the company's success or failure.
- Adequate planning and supervision: Auditors must plan their work and supervise their staff to ensure that the audit is conducted in a thorough and efficient manner.
- Evidence: Auditors must gather sufficient and appropriate evidence to support their findings and conclusions.
- Reporting: Auditors must prepare a report that accurately reflects their findings and conclusions, and that complies with all relevant reporting requirements.
These examples illustrate how GAAS provide a framework for auditors to conduct their work in a professional and ethical manner, and to produce reports that are useful to stakeholders in making informed decisions about the company being audited.