Question

You have been asked to make a presentation in your International
Business class about how globalization is impacting the auditing profession. In preparation,
you met with your auditing professor and discussed these questions:
a. What organizations are responsible for establishing U.S. auditing standards used by CPA
firms when auditing financial statements prepared by organizations based in the U.S.?
b. What organization is responsible for establishing auditing standards internationally?
c. To what extent are AICPA auditing standards and international auditing standards similar?
d. What is the process the AICPA Auditing Standards Board (ASB) uses to develop
AICPA auditing standards?
e. To what extent are PCAOB auditing standards impacted by international standards?
f. What auditing standards should an audit firm follow when they audit a client located in a
foreign country that is listed on both a foreign stock exchange and a U.S. stock exchange?

Answer 1

a. The Auditing Standards Board (ASB) is vested with the powers to issue Auditing Standards, Attestation and Quality control statements to CPAs (Certified Public Accountants)

This power has been delegated to ASB by AICPA (American Institute of Certified Public Accountants)

ASB consists of 20 members and every member in this committee will be nominated by Director of AICPA.

b. The organization that is responsible for establishing auditing standards internationally is IFAC ( International Federation of Accountants ) through the IAASB ( International Auditing and Aassurance Standards Board )

c. AICPA auditing standards are similar to International auditing standards in every aspect, except in the below stated five aspects

1. Documentation of audit procedures.
2. The going concern considerations,
3. The internal control over financial reporting,
4. The risk assessment and
5. Use of another auditor

d.

The ASB (Auditing Standards Board) conducts it’s meetings frequently (based on time intervals) to consider auditing issues and brace and draft pronouncement proposals, and conducts public hearings time to time. If public at large are interested in new SAS proposals, then those are open to public and discussed at their meetings. The meetings are considered informal to boost open thought sharing and information exchanging between its members

Quorum to these meetings consists the majority of Auditing Standards Board members or their representatives, and other members of the AICPA are also invited to that, and the agenda elements of the meeting are thoroughly discussed and voting will also be conducted before making it in to a draft proposal. And this draft will be called as ED (Exposure Draft).