![]() ASB auditors are required to assess material misstatement based on companies and its operating environment (Linberg & Seifert, 2011). Auditors under ISA should also assess how companies respond to these risks. ISA specifically mentions to obtain understanding of entities business risks including operating and strategic risks (Linberg & Seifert, 2011). Risk assessment is other important audit procedures where ASB, ISA and PCAOB standards differ. ASB and ISA still require to test internal controls to make sure they are sufficient and functional (Linberg & Seifert, 2011). ASB and ISA do not have these requirements explicitly expressed in their standards. Management must provide their assertion that they have effective internal controls in place over financial reporting and this should accompany audit report. When Congress in 2002 passed Sarbanes Oxley Act (SOX), it required that company management to put internal controls to make sure financial reporting is correct (Linberg & Seifert, 2011). Internal control over financial reporting is another difference between PCAOB, ASB and ISA. Bring all of these into one standards will make easier for its user but also for auditors. It looks like all three boards have different standards. ASB is looking to see if going concern period should be limited to 12 months or should extend more than 12 months (Linberg & Seifert, 2011). ISA’s going concern period is at least one year but not limited only to one year. PCAOB defines going concern period as one year from the date of fiscal year being audited. Going concern considerations is one of the other differences between US auditing standards and international auditing standards. ![]() These examples clearly demonstrate that US and international standards have major differences when it comes to engagement memo and document retention policy. PCAOB standards requires the audit work to be retained for seven years whereas ASB only require for five years and ISA requires to retain for at least five years (Linberg & Seifert, 2011). Other differences is regarding documentation retention policy. PCAOB auditing standards require for auditors to obtain engagement letter before they start audit work. US standards are more prescriptive compared to that of international standards ( (Linberg & Seifert, 2011). The major differences are again like IFRS and GAAP, rules based standards against principle based standards.ĭocumentation of audit procedures is one of the differences between GAAS and ISA. The other differences are going concern considerations, internal control over financial reporting, risk assessment and use of another auditor. First differences are about the documentation of audit procedures. ![]() There are five major differences between GAAS and ISA (Linberg & Seifert, 2011). The Clarity Project is an attempt to make US auditing standards more competitive, compliance and easier for its users. The convergence project aims for making auditing standards coordinated and comparable between two standards (Linberg & Seifert, 2011). One other objective of Clarity Project is to work towards convergence with ISAs. This is other area where US standards and international standards differ and is part of discussion on how these two standards can be aligned once the United States adopts International Financial Reporting Standards(IFRS).ĪSB auditing standards are for publicly traded companies and Clarity Project is an attempt to make GAAS easier to read, understand, and apply ( (Linberg & Seifert, 2011). International Standards on Auditing (ISA) are issued by International Auditing and Assurance Standards Board (IAASB). Auditing Standards Board (ASB) and Public Company Accounting Oversight Board (PCAOB) issue rules that become generally accepted auditing standards (GAAS).
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