Question

As though explaining to an interested party who is not familiar with International Auditing Standards, explain what these are and how they are similar to and different from American auditing standards.

Answer 1

Ans: International standards of auditing are basically the standards given by International federations of accountant (IFAC) under the umbrella of International auditing and assurance standard board. These standards are used in performance of audit activity of financial data of any company.

On the other side American audit standards are given by auditing standard board which is nothing but a division of AICPA (American Institute of Certified Public Accountant). These standards are used for performance of audit activities of financial information in any company.

The major commonalities between these two auditing standards are in selection of audit committee and audit period.

There are many differences available in both the standards: Such as 1) The Audit procedures’ documentation: In American audit standards it is very prescribed , under this Engagement letter has to be signed before beginning of audit work but under International standards of auditing, there is no such requirement. Documents are supposed to be retained for 7 years as per American audit standards while Documents are supposed to be retained for 5 years as per International standards of auditing.

Another major differences we come across between these two auditing standards are that under American audit standards, Going concern of the entity is basically considered to be 1 year from the date its accounts have been audited, while on the other side as per International standards of auditing, going concern period may be more than one year or at least a year.