- March 27, 2013
- Posted by: essay
- Category: Term paper writing
Development of professional standards at the international level makes several organizations. Directly auditing standards are made by the International Auditing Practices Committee (IAPC), acting on the Rights of the permanent autonomous committee within the International Federation of Accountants (IFAS), which was established in 1997.
International rules (standards) of auditing, which are published by the Committee, promote development of the profession in those countries where the level of professionalism is lower of the worlds, and unification of the approach to auditing in an international scale. But international standards in different countries are used differently. This is due to the fact that the standards for practical applications are divided into several groups:
1. The first group includes standards that are in one country or another can be taken immediately, totally and completely.
2. The second group of standards that can be approved and adopted with modifications.
3. Standards of the third group not only need to be clarified, but in creating the appropriate economic, political and other conditions for their introduction.
4. The fourth group includes standards, which use in this country depends on the historical development trends and national psychology.
In this regard, some countries are cautious in forming their own, and the application of international auditing standards. For example, in Canada, Britain and the U.S. there are national standards, that is why firms only take into account international standards of auditing. At the same time in other countries, such as Australia, Brazil, Holland and others, international standards are used as a base for developing their own. In countries where where there are no own standards (Cyprus, Malaysia, Nigeria, etc.), international standards are used as national. (Audit Quality Forum 2006)
International standards define a common approach to the audit, audit scope, types of reports of auditors, questions of methodology, as well as basic principles to be followed by all members of the profession. The generally accepted rules (standards) have different complements and comments, depending on changes in economic conditions. In addition to the generally accepted rules (standards) auditors are guided by other rules, including requirement standards, forecasts and plans, as well as a code of ethics of the auditor. It should be noted that auditing standards determine the correctness of the actions of the auditor in general, but no specific actions, techniques, methods, procedures used in the process of verification, which may be different and the rationality of which must be justified. (Audit Quality Forum 2006)
Auditing standards regulate the professional activities of auditors and are widely recognized throughout the world, as they allow to achieve maximum objectivity in terms of audit opinions on the conformity of financial statements of generally accepted accounting principles and form of financial statements, and also establish uniform criteria for qualitative comparison of results of audit activities. Uniformity of auditing is a necessary condition because of the diversity of techniques applied in the audit practice and the complexity of comparing them. Auditing standards formulate common basic requirements that determine the standards for quality and reliability of the audit and provide a certain level of assurance of the results of the audit for compliance with these requirements. (Bode S, 2007)
The importance of standards is that they:
– provide high quality audit;
– promote new scientific achievements in the audit practice and help users understand the process of audit;
– eliminate the need for control by the state;
– help auditors to negotiate with the client;
– provide the connect ion between individual elements of the audit process;
– forcing auditors to continuously improve their knowledge and skills;
– ensure the comparability of the quality of individual audit firms;
– streamline and facilitate audit work. (Regan 2003)
They establish uniform requirements for the audition process, the audit report and the auditor itself. With the changing economic situation, auditing standards are subject to periodic review in order to maximize the needs of users of financial statements. On the basis of auditing standards is formed the program for training of auditors, as well as requirements to conduct examinations for the right to engage in audit activity. Auditing standards are the basis for evidence in court on the quality of the audit and determine the measures of the independent auditors. (Regan 2003)
However, the audit standards do not cover all the aspects of the audit work. They contain clear and concise compilation of the principles of audit, as well as those professional norms and rules which feasibility and strength have proved during the auditing, backed by experience of a large number of auditors in different countries.