Chapter 2 Auditing Standards,2.1 GAAS (Generally Accepted Auditing Standards) 2.2 Quality Control 2.3 China Standards on Auditing, Review, Other Assurance, Related Services and Quality Control,Learning Objectives,After studying this chapter, you should be able to 1. Understand ten Generally Accepted Auditing Standards. 2. Comprehend definition of an assurance engagement. 3. Distinguish assertion-based engagements and direct reporting engagements. 4. Learn the elements of an assurance engagement. 5. Distinguish reasonable assurance and limited assurance. 6. Learn elements of quality control.,Standards are established to measure the quality of performance of individuals and organizations. Standards relating to the accounting profession concern themselves with CPA professional qualities, with the judgment exercised by CPAs in the performance of their professional engagements, and with a CPA firms quality control.,2.1 GAAS (Generally Accepted Auditing Standards),2.1.1 Ten Generally Accepted Auditing Standards 2.1.2 Statements on auditing Standards 2.1.3 International Standards on Auditing,Glossary,GAAS (Generally Accepted Auditing Standards) 一般公认审计准则 general standards 一般准则 standards of field work 现场工作准则 standards of reporting 报告准则 due professional care 合理的职业谨慎 statements on auditing standards 审计准则说明书 International Standards on Auditing 国际审计准则 International Auditing and Assurance Standards Board (IAASB) 国际审计与鉴证准则理事会 International Federation of Accountants (IFAC) 国际会计师联合会,Auditing standards are general guidelines to aid auditors in fulfilling their professional responsibilities in the audit of historical financial statements. These include consideration of professional qualities such as competence and independence，reporting requirements，and evidence.,2.1.1 Ten Generally Accepted Auditing Standards,GENERAL STANDARDS STANDARDS OF FIELD WORK STANDARDS OF REPORTING,Developed by the AICPA in 1947, 10 generally accepted auditing standards (GAAS) represent the basic framework of authoritative auditing guidelines for professional accountants. There are three categories for the 10 generally accepted auditing standards; they are general standards, standards of field work，and reporting standards.,GENERAL STANDARDS,The general standards stress the important personal qualities that the auditor should possess.,1. The audit is to be performed by a person or persons having adequate technical training and proficiency as an auditor. 2. In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors. 3. Due professional care is to be exercised in the planning and performance of the audit and the preparation of the report.,Adequate Technical Training and Proficiency,The first general standard is normally interpreted as requiring the auditor to have formal education in auditing and accounting, adequate practical experience for the work being performed, and continuing professional education.,Independence in Mental Attitude,As we all know independence is very important to auditing profession, so CPA firms are required to follow several practices to increase the likelihood of independence of all personnel. For example, each partner and employee must answer an “independence questionnaire” annually, dealing with such things as stock ownership and membership on board of directors.,Due Professional Care,Due care in the performance of all aspects of auditing means that the auditor has a professional responsibility for fulfilling his duties diligently and carefully. As an illustration, due care includes consideration of the completeness of the working papers, the sufficiency of the audit evidence，and the appropriateness of the audit report. As a professional, the auditor must avoid negligence and bad faith, but the auditor is not expected to make perfect judgments in every instance.,STANDARDS OF FIELD WORK,The standards of field work concern evidence accumulation and other activities during the actual conduct of the audit.,1. The work is to be adequately planned and assistants, if any, are to be properly supervised. 2. A sufficient understanding of internal control is to be obtained to plan the audit and to determine the nature, timing, and extent of tests to be performed. 3. Sufficient competent evidential matter is to be obtained through inspection, observation, inquiries, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under audit.,Adequate Planning and Supervision,The first standard deals with ascertaining that the engagement is sufficiently planned to ensure an adequate audit and proper supervision of assistants. Supervision is essential in auditing because a considerable portion of the field work is done by less experienced staff members.,Understand the Clients Internal Control,One of the most widely accepted concepts in the theory and practice of auditing is the importance of the clients system of internal control to ge