GENERALLY ACCEPTED AUDITING

STANDARDS
and
SYSTEM OF QUALITY CONTROL
 01
The 10 GAAS
 General
Standards
1. Adequate technical training and
proficiency
2. Independence in mental attitude
3. Due to professional care
01 Adequate technical training and
proficiency
• Formal university education for entry into the profession
• Practical training and experience in auditing
• Continuous professional education during the auditor’s
professional career
02 Independence in mental attitude
The auditor must be free of client influence in performing
the audit and reporting the findings. They must maintain
independence in all matters relating the audit.
03 Due to professional care
The auditor must be diligent and careful in performing the
audit and issuing a report on the findings. The standard of
due care requires the auditor to act in good faith and not to
be negligent in an audit.
 Standards of
Fieldwork
4. Adequate planning and proper
supervision
5. Understanding the internal control
structure
6. Obtaining sufficient competent
evidential matter
04 Adequate planning and proper
supervision
The work is to be adequately planned, and assistants, if
any, are to be properly supervised.
05 Understanding the internal control
structure
A sufficient understanding of internal control is to be
obtained to plan an effective and efficient audit.
 Obtaining sufficient competent evidential
06 matter
The 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.
 Standards of
Reporting
7. Financial statements presented in
accordance with GAAP
8. Consistency in the application of
GAAP
9. Adequacy of informative disclosure
10. Expression of opinion
 Financial statements presented in
07 accordance with the GAAP
The first reporting standard requires the auditor to identify
GAAP as established criteria for evaluating management’s
financial statement assertions.
08 Consistency in the application of GAAP
The report shall identify those circumstances in which
such principles have not been consistently observed in the
current period in relation to the preceding period.
09 Adequacy of informative disclosure
Informative disclosures in the financial statements are
regarded as reasonably adequate unless otherwise stated
in the report.
10 Expression of opinion
The final reporting standard requires the auditor to either
express an opinion on the financial statements taken as a
whole or state that an opinion cannot be expressed.
 02
PSQC 1
(Redrafted)
Quality Controls for Firms that Perform
Audits and Reviews of Financial
Statements, and Other Assurance and
Related Services Engagements
 Applying, and
Complying with,
Relevant Requirements
Applying, and Complying with, Relevant
Requirements

Personnel within the firm responsible for establishing and

maintaining the firm’s system of quality control shall have an
understanding of the entire text of this PSQC,
including its application and other explanatory material,
to understand its objective and to apply its requirements
properly.
 Elements of a
System of Quality
Control
Elements of a System of Quality Control
• Leadership responsibilities for quality within the firm
• Relevant ethical requirements
• Acceptance and continuance of client relationships and
specific engagements
• Human resources
• Engagement performance
• Monitoring
Documentation of
the System of
Quality Control
Documentation of the System of Quality Control
The firm shall establish policies and procedures that require retention
of documentation for a period of time sufficient to permit those
performing monitoring procedures to evaluate the firm’s compliance with
its system of quality control, or for a longer period if required by law or
regulation.

The firm shall establish policies and procedures requiring

documentation of complaints and allegations and the responses to
them.
 03
PSA 220
Quality Controls for an Audit
of Financial Statements
Quality Control for an Audit of Financial
Statements
• Leadership Responsibilities for Quality on Audits
• Acceptance and Continuance of Client Relationships and
Audit Engagements
• Human Resources – Assignment of Engagement Teams
• Engagement Performance
• Monitoring
• Documentation