Audit

consists of independent outside directors, external audit firm reports to them

appoints board members of PCAOB, defers standard setting authority to FASB, issues guidance and regulations on the accounting methods to be used in financial statements

issues auditing standards for public companies, inspections of registered audit firms and have disciplinary authority over them

Issues accounting principles/standards for use by preparers

represents CPAs in the US, sets professional standards for CPAs, creates CPA exam

private sector audit standard setting for nonpublic companies

10 Generally Accepted Auditing Standards adopted by PCAOB

TIP

training and proficiency

independence in mental attitude

Due Professional care

PIE

Planning and supervision

Understanding of entity and environment to assess risk of material misstatement (internal controls)

Obtain sufficient appropriate evidence

ACDO

financial statements in accordance with GAAP

GAAP applied consistently

Adequacy of disclosures

Express or disclaim an opinion