Some entities are doing it without the intention to defraud others but there are also others who delineate from the standards provided with the intention to mislead others into believing that the company is performing well or has enough assets to pay all of its liabilities despite the opposite fact. GAP) However, there are instances that business entities do not accurately follow the rules and guidelines provided in the GAP. The whole business process of every business entity or organization are done or made in accordance with the Generally Accepted Accounting Principles. These business entities are required to record,interpret and report every business transaction that has a corresponding effect on the accompany economic standing. They are primarily in charge with checking the accuracy of the financial statements reported by business entities. Irritating, Chewier,& Karl 2008) Despite the fact that the CPA has been impliedly stripped off of its authority in providing guidelines and rules for auditors and accountants to abide by yet, the standard it had developed continues to be in effect since the guidelines revived serves as a foundation for the creation of further measures that safeguards Auditors have an important role in the business world. The said standards are developed into three categories such as the general standards which apply to the auditor and the audit firm, fieldwork standards which apply to the conduct of the audit and the last is the reporting standards which are applicable to communicating the auditor’s opinion. “The Auditing Standards Board of the CPA developed ten generally accepted auditing standards for the audit of financial statements that serves as a foundation for all other standards, including those that have been adopted by the PEPCO.īecause the standards are conceptual in nature, an understanding of them provides a foundation to better understand other tankards. The Generally Accepted Auditing Standards (GAS) was developed by the American Institute of Certified Public Accountants when it has the authority to oversee and provide guidelines in the conduct of Certified Public Accountants in the Accounting and Audit Profession. The Generally Accepted Auditing Standards (GAS) contains the necessary guidelines that will aid auditors in conducting an audit that will truly reflect the true financial standing of a business entity. There are also rules and guidelines that auditors follow in conducting the audit. These auditors must remain independent and objective in conducting the audit to prevent the stakeholders from thinking otherwise. To further safeguard the stakeholders who are relying on the business entity reported uncial statements, the government is requiring that these financial reports be audited by external auditors who will check the reasonableness of its accuracy. This is to prevent companies from misstating their financial reports especially if it has the intention to mislead the public and its stakeholders on its true economic standing. The government had imposed rules and regulations as well as guidelines on how these financial statements are made. Thus, business entities have to accurately report its economic standing and it is the role of the auditors to render an audit that will accurately show the financial standing of the company with the aid of Generally Accepted Auditing Standards. Failure to reflect an accurate report will have dire consequences not only to the business organization but also to the other stakeholders. The prepared financial statements will show the financial position, the comprehensive income, the cash flows and the changes in equity of the company. The financial statement will serve as proof on how the entity fared, on whether or not it was able to gain a profit or suffered a loss while conducting its daily business operation. A business entity has the need to prepare financial statements that will truly reflect its economic performance within a business cycle. Independence and impartiality are character traits that auditors must nurture and the materiality of an audit finding has an inverse relationship with audit risk. Auditors who considered the report to be free from any material defect can render a report of unqualified opinion and a disclaimer is issued if the auditor will not be able to render a report on the basis of want of sufficient information. The report render can either be qualified opinion, unqualified opinion, adverse pollen and disclaimer of opinion. Auditors can render reports of the financial statements audited In four ways. GAS are divided into three categories such as the general standards, the standards of fieldwork and standards f reporting.
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