Generally Accepted Auditing Standards

Generally judge Auditing Standards Paper Madeline Cates ACC/491 Contemporary Auditing 1 November 7, 2012 Thomas A. House Auditing is extremely important to our businesses, our state and federal government, investors, banks, and our overall economy. Without auditing there would be pot of room for mistakes. Boynton & Johnson (2006) define auditing as the following, A systematic process of objectively obtaining and evaluating evidence regarding assertions about frugal actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users (p. ). To break it down auditing follows a certain process of steps using financial statements and tax returns to evaluate an organization in an so-so(p) way. Once this is done a written report is made by the auditors to give the organization the believability they deserve. This credibility is passed on to interested users such as banks, stockholders, and manag ement. The purpose of this paper is to explain the nature and functions of auditing, and come to them to an organization in which we ar familiar. The organization is which I am familiar with is Chilis demote and Grill where I have been an employee for over 4 years.Chilis is owned by Brinker Nation, which is publically traded on the New York Stock Exchange under the symbol EAT. Brinker Nation is audited by independent auditing committee with no relation to the company, they follow the standard of the NYSE as well as the Securities and Exchange (SEC). The Generally Accepted Auditing Standards (GAAS) are a set of standards that public accountants are required to use. All together there are 10 different GAAS that are used to establish the quality of performance and the overall objectives to be achieved in a financial statement audit. Boynton & Johnson, 2006) The Generally Accepted Accounting Standards apply to financial, operational, and meekness audits. Typically a CPA preforms a f inancial audit by evaluating a firms financial space to see if they are using GAAP. The results are then distributed to the general public. A compliance audit focuses on whether or not a firm is following rules and government regulations, such as the Sarbanes-Oxley defend that requires duel-purpose auditing and compliance audits.Operational audits focus on activities in relation to objectives. This is also known as a management audit. The Sarbanes-Oxley Act of 2002 and the Public Company Accounting Oversight Board (PCAOB) affect publically traded companies. The PCAOB is a private field that was created by the SOX Act of 2002. Basically the PCAOB oversees auditors of publically traded companies to protect investors, creditors, and the general public. According to Boynton & Johnson (2006), the PCAOB was given authority in 5 major areas including, 1.Registering public accounting firms that audit the financial statements of public companies. 2. Setting quality simplicity standards f or peer review of auditors of public companies and conducting inspections of registered public accounting firms. 3. Setting auditing standards for audits of public companies. 4. Setting independence and ethical motive rules for auditors of public companies. 5. Performing other duties or functions to promote high professional standards ? for public company audits, and apply compliance with the Sarbanes-Oxley Act of 2002.With the help of the SEC, PCAOB, SOX Act, and GAAS we can ensure investors and creditors that publically traded organizations are presenting honest, fair, and straightforward financial information. Auditing is rattling to the growth of our businesses, our local and federal government, and our economy as a whole. Resources Boynton, W. C. , & Johnson, R. N. (2006). Modern auditing Assurance services and the justice of financial reporting. (8th ed. ). Hoboken, NJ Wiley. Louwers, T. , Ramsay, R. , Sinason, D. , & Stawser, J. R.. (2007). Auditing and assurance services. New York, NY McGraw-Hill.