Essay on Auditing Standards
This paper thus seeks to discuss the meaning, similarities, and differences of International and American Auditing Standards. More so, the paper will enlighten on the advantage and disadvantage of all countries adapting to the set of auditing standards through examination of the addressed issue. It will also examine the ethical standards, the importance of the global standards and the code of ethics associated with the International Auditing Standards. Part A The familiarity of International Auditing Standards (IAS) is known to the respective parties where we see the information can be found online and in some cases, the information is found in printed sources. This clearly shows that these can be familiar to anyone who is interested in knowing the content that is available.
” Another primary difference is the documentation which engages maintenance of the agreements or the contracts when the documents are being inspected. The American audit requires a copy or abstract of such documents to be inclusive in the documentation while in International this is not necessary or optional. However, there are similarities between international and the American auditing standards in that both move towards convergence with the existing audits. The IAS targets their convergence with auditing standards that exist in Canada, United States, and other countries while the U. S also has the goal to converge with the IAS. As stated by Wong (2004), the auditing standards in countries that have accepted the standards, has been able to safe guard the citizens in large.
The public is able to have the assurance and confidence that regardless of the business occurrence venue, standards of high quality will still be applied. The investors will invest in the country due to the standards set in the financial information since it is more beneficial. Different investors are able to share more of ideas and later implementation of this idea to achieve a common goal set and thus, will lead to the expansion of a financial system that favors many parties that are involved which could be even different countries and individuals. The high quality of the financial standards has contributed to the growth of the economy which does not only benefit the state but also the public. This can be controlled if the well able countries can sponsor the less able or if there can be standards that can be adapted to this country that cannot adapt to this auditing standards so long as the services are the same thus no party is disadvantaged.
Moreover, another disadvantage is the presence of manipulation down-side the litheness that the auditing standards allow, that is companies in various countries are able to utilize the methods they prefer. This has contributed to the manipulation of profit and revenue which hide problems that occur in the finances which encourage fraud. For instance, altering the inventory valuation method can result in more income in the present year loss and profit statement making a country appear to have more profits than it really is. Fraud can be an enemy of the country as it can lead to the collapse of the company economically. It is important to have strong global standards, which is based on the auditors’ work. This can be seen in the confidence available to the involved parties which will result in high confidence in their financial goal and sticking to the strategies.
Following that American is known for the economic growth and high currency which is good for business. A strong standard will offer financial services during planning which help during investments, cash flow, and finance management. Trust basis is also important as the standards provide a foundation form financial professional which make it easy to achieve once objectives (Gilbert, Rasche & Waddrock, 2011). This will help in the smooth operation that is emulated by other countries. References American Institute of Certified Public Accountants (AICPA). Substantive Differences Between the International Standards on Auditing and Generally Accepted Auditing Standards. Ampofo, A. A. Rasche, A. Waddock, S. Accountability in a global economy: The emergence of international accountability standards. Business Ethics Quarterly, 21(1), 23-44. Wong, P.
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