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Professional Auditing Standards and the Audit Opinion Formulation Process

4 important questions on Professional Auditing Standards and the Audit Opinion Formulation Process

The AICPA and IAASB both use the following format for auditing standards:

- Introduction
- Objective
- Definitions
- Requirements
- Application and Other Explanatory Material

How does the PCAOB's standards differ from the format of the AICPA and IAASB standards?

Their standards are organized by topical areas that follow the flow of the audit opinion formulation process. Also their numbering convention is puposely idfferent from the convention used by the AICPA and IAASB, to help avoid the potential for confusion between its standards and those of other standard setters.

Principles Underlying Auditing Standards

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What are the five phases of the Audit Opinion Formulation Process?

I - Making client acceptance and continuance decisions
II - Performing risk assessment
III - Obtaining evidence about internal control operating effectiveness
IV - Obtaining substantive evidence about accounts, disclosures and assertions
V - Completing the audit and making reporting decisions