Assignment 1

Generally Accepted Auditing Standards

Generally Accepted Auditing Standards | Action by Jones Resulting in Failure to Comply with Generally Accepted Auditing Standards | The auditor must have adequate technical training and proficiency to perform the audit. | Jones, CPA hired to students that did not have any experience. | The auditor must maintain independence in mental attitude in all matters relating to the audit. | Arthur Jones, CPA, accepted the offer of receiving a bonus if bank approves the loan. | The auditor must exercise due professional care in the performance of the audit and the preparation of the report. | Jones, CPA did not exercise “professional care in performance of the audit and preparation of the report” because he failed to follow the GAAP guidelines. There were no notes included within the report, students conducted the report without guidance etc. | The auditor must adequately plan the work and must properly supervise any assistants. | Jones did properly supervise the students. He only told them what to. He should have reviewed the information that the students prepared and ensured that Generally Accepted Auditing Standards were followed. | The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures. | The students were told by Jones not to spend time reviewing the controls and to simply concentrate on mathematical errors. | The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit.