Multiple Auditing Standards Intensify the Dilemma of What to Teach

By Mastracchio, Nicholas J.; Lively, Heather M. | The CPA Journal, October 2012 | Go to article overview

Multiple Auditing Standards Intensify the Dilemma of What to Teach


Mastracchio, Nicholas J., Lively, Heather M., The CPA Journal


Diverging Guidance Presents Challenges for Educators

While the gap between standards issued by the International Auditing and Assurance Standards Board (IAASB) - the auditing standards-setting committee of the International Federation of Accountants (IFAC) - and those issued by the Auditing Standards Board (ASB) has been minimized, auditing standards within the United States for audits of publicly traded companies and private companies have grown even further apart - and indications are that they will continue to do so. At present, there seems to be little hope for the convergence of the ASB' s auditing standards and those of the Public Company Accounting Oversight Board (PCAOB), which regulates the activities of auditors of public companies in the United States. Thus, educators who teach courses on auditing are faced with the dilemma of how to present multiple standards, as well as explain the differences that exist between codified ethical standards in the United States and international standards.

Convergence with International Standards

In 2007, the ASB initiated the Clarity Project to address the clarity, length, and complexity of its auditing standards. It decided to redraft the standards and converge the Statements on Auditing Standards (SAS) with International Standards on Auditing (ISA) issued by the IAASB. The ASB established a Clarity Task Force to clarify and converge the SASs and the ISAs. The clarified standards were restructured, and objectives were established for each clarified SAS, including a definition section and a separation of requirements from application material.

In October 201 1, after an extensive fouryear project, the ASB issued new standards in a format that essentially converged with ISAs. For example, the new SAS 122, Statements on Auditing Standards: Clarification and Recodification, is an 805page pronouncement that supersedes AU section 110, ''Responsibilities and Functions of the Independent Auditor"; AU section 120, ''Defining Professional Requirements in Statements on Auditing Standards"; AU section 150, "Generally Accepted Auditing Standards"; AU section 201, "Nature of the General Standards"; AU section 210, 'Training and Proficiency of the Independent Auditor"; AU section 220, 'Independence"; and AU section 230, "Due Professional Care in the Performance of Work."

On September 1, 2011, the AICPA issued a report, "Substantive Differences Between the International Standards on Auditing and Generally Accepted Auditing Standards [GAAS]," that analyzed the differences, labeled as "Requirements in the ISAs not in GAAS." It concluded that almost all of the differences are due to laws and regulations or accounting frameworks that are not applicable in the United States. Only two exceptions were cited:

* ISA 600, The Work of Related Auditors and Other Auditors in the Audit of Group Financial Statements, does not allow the audit report on group financial statements to make reference to a component auditor unless required by law; GAAS does.

* ISA 810, Engagements to Report on Summary Financial Statements, allows two different phrases in opining on summary financial statements; GAAS only uses one.

The new pronouncements are effective for audits of financial statements for periods ending on or after December 15, 2012. Although the CPA Exam Content Specification Outline lists international auditing standards, the questions on the exam will include the new GAAS standards and will probably eliminate the international standards because they have almost all converged into GAAS.

Two Sets of U.S. Auditing Standards

In April 2003, the PCAOB adopted certain preexisting standards as its interim standards, including GAAS, as described in 43 sections of the ASB's SASs. Essentially, because the PCAOB did not adopt the revisions to GAAS, its standards are based on the superseded SASs and are no longer identical to the ASB's standards^ - that is, many of the 49 AU sections still used by the PCAOB have been superseded by the ASB, the original author. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Multiple Auditing Standards Intensify the Dilemma of What to Teach
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.