The evolution of auditing standards has been a process whereby the accepted norms for conducting an audit have become increasingly comprehensive, intricate and enforced. Much like a business or other entity’s operation, an audit comes with certain associated risks and the regulations governing these risks must be taken into account to be successful. Auditing standards provide a set of principles, procedures and guidelines auditors must attend to in order to ensure that the audit is performed adequately and that the results are reliable.
Auditing standards originate from two primary sources, the International Auditing and Assurance Standards Board (IAASB) and the Generally Accepted Auditing Principles (GAAP). The IAASB is an independent body of the International Federation of Accountants (IFAC) whose purpose is to set the highest standards in auditing, assurance and other related activities. IAASB releases several series of standards on auditing, review, and assurance, as well as related services to guide the performance of international audits in public and private organizations. The GAAP, on the other hand, sets the qualitative framework used by auditors and other users of financial statements to make informed decisions.
The auditing standards of each countryaim to provide a common basis whereby users of financial statements can perform their interpretation with an understanding of the principles or assurances applied in their production. The main objective of any auditing standard is to be able to provide independent proof to the legal obligations associated with providing a company’s financial information to its stakeholders. Typically, auditing standards will require an auditor to plan and execute audit operations that follow fundamental principles and comply with regulatory guidelines and regulations.
The goal of international auditing standards is to promote public confidence in the financial reporting process. Public confidence must be maintained when companies, public or private, are making decisions based on the financial activity of their organization. Establishing international auditing standards allows for the information to be presented in a way that is accurate, transparent and fully compliant with the applicable regulatory framework. This allows for consistency among different reports and entities and eliminates any discrepancies or errors in financial reporting or any other related activities.
Ultimately, auditing standards are designed to ensure compliance with relevant laws and regulations. The objective of any audit should be to ensure the accuracy and completeness of any financial statements that are presented to potential investors, creditors or other stakeholders. The standards should be approached with a mindset of identifying and evaluating the financial risks of the organization and determining the impact that such risks may have on its operations. Auditors strive to identify and examine financial statements in the context of future operations and how the financial statements might potentially affect future operations.
Auditing standards enable all stakeholders to have greater trust in the accuracy and reliability of the financial information that is provided. As the auditing process must always be conducted in accordance with the applicable auditing standards, any findings of inaccuracies in the financial statements must then be disclosed, investigated and resolved promptly. The application of appropriate auditing standards not only ensures compliance with relevant laws and regulations but also satisfies the expectations of investors and other stakeholders who rely on the financial statements for significant decisions.
Auditors must adhere to auditing standards not only to ensure compliance with the applicable laws and regulations, but also to protect the interests of both the organization and its stakeholders by delivering reliable financial statements. It is only by committing to the highest levels of integrity and professionalism that organizations can ensure consistent and transparent financial reporting and maintain the trust of their stakeholders.
