Question

Is it necessary to have a set of International Auditing Standards? Would it be better if the International Accounting Standards were allowed to be set by or be based upon U.S. auditing standards? Or perhaps International Auditing Standards should be set by the United Nations? In your opinion, is it perhaps easier for the world to reach an agreement on International Auditing Standards than it is for the world to reach an agreement on International Accounting Standards? Why or why not for each of the above individual questions? Be specific.

Answer 1

Having an international set of audit standards is necessary as it enables uniformity of financial reporting for companies that are located in various countries and geographical locstions. It enables comparability for investors putting their money in international markets and better understanding of the financials.

The international standards cannot he designed based on one particualar country’s standards as the whole purpose of framing international standards will be defeated. The law must be uniform and must be designed so that companies in every country can adopt. Neither can United Nations involve in these matters since it is a not for profit organization involved mostly in humanitarian work. An international accounting body to frame these guidelines will be more appropriate.

It is certainly easier for the world to reach an agreement on international audit standards than international accounting standards since the way an audit is conducted can be made uniform with regard to reporting, process and techniques. However, attaining uniformity in accounting standards is difficult since each country has its own set of rules based on the prevailing economic conditions and ongoing accounting practices.