Question

If all countries agreed to follow a single set of auditing standards, what would the challenges be and how could these be effectively addressed?

Answer 1

MEANING OF AUDIT STANDARDS -

Audit standards are the GENERALLY ACCEPTED AUDIT STANDARDS (GAAS) , standards are a set of guidelines issued by the accounting body of the country which helps Auditors in auditing.

NATURE OF AUDIT STANDARDS-

Accounting standards are guidelines providing the framework so the financial statements can be prepared.

Accounting standards are made for bringing uniformity in accounting practices and to ensure transparency, consistency and comparability.Accounting standards are mandatory in nature .

Accounting standards are prepared keeping in view the business environment and laws of the country. It naturally means that the guidelines change with change in business environment and laws.

EXPLANATION OF THE CHALLENGES-

Every country has different business environment and laws so if all countries agreed to follow a single set of auditing standards, they face a lot of challenges like they have different business environment and laws so some laws will become hindrances between the accounting standards. Some countries follow audit standards based on principles based but some countries like India follow audit standards based on rules and historical value etc. Currency of each country is also different it will also become a challenge because each currecy has different value .

OPINION ON HOW IT COULD BE EFFECTIVELY ADDRESSED-

It can be effectively addressed by following standards based on principles so that every financial statements could be easily understandable.