Definition
GAAS stands for generally accepted auditing standards, the body of AICPA requirements that governs audits of private companies, nonprofits, and other nonissuers in the US. The Auditing Standards Board issues them as Statements on Auditing Standards, and they are codified in AU-C sections. An audit that follows GAAS says so in the auditor's report, and the auditor must also comply with the AICPA Code of Professional Conduct.
Why it matters in an audit or review
GAAS establishes what the auditor must do and what the report must say. AU-C 200 sets the overall objectives, including reasonable assurance and professional skepticism. AU-C 230 requires documentation of any departure from a relevant requirement, and peer review tests GAAS compliance. Audits of public companies follow PCAOB standards instead.
Example
Illustrative: a peer reviewer finds that a risk assessment did not document the inquiries made about fraud. The finding cites the AU-C requirement and the firm updates its checklist.
Common mistakes
Assuming checklist completion equals GAAS compliance. The auditor must exercise judgment.
FAQ
Is GAAS the same as GAAP?
No. GAAP governs how the financial statements are prepared, while GAAS governs how the audit is conducted.
Sources
- AICPA, AU-C Section 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards
- AICPA, AU-C Section 700 (reference to GAAS in the auditor's report)
- AICPA, AU-C Section 230, Audit Documentation
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error