GAAS Standards Vs. GAGAS Standards Term Paper

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Since the bygone years, one of the important goals of auditing standard creators has been enhancing the interactions among the auditors as well as their services users. (Broadus, 7)

In this effect, during the initial part of the year 1988, the auditing standards board of the American Institute of CPAs brought out a lot of new types of SASs, many of which are targeted towards improving the communication of auditors. Also during that period, rising public focus was being provided on the audit of governmental bodies. Therefore even when the new SASs is considered to be settled, the GAO was reviving GAGAS as contained with regard to the yellow book. The yellow book, similar to the AICPA standards contains the need for auditor interactions that have been given effect since Jan 1, 1989. Among the areas of communications dealt within the yellow book is the duty of auditors for interacting with the aspects of internal regulation observed at the period of audit. This role was dealt with for GAAS audit in the SAS no. 60. Nevertheless, the yellow books do not give any particular illustrations of the communication of issues associated with internal regulation structure; its needs in certain areas are wider compared to GAAS. Thus, to assist, the Auditors make GAAS applicable in governmental audits; the ASB designed SAS no. 63 that gives information regarding the manner in which auditors must change SAS No. 60 reports with regard to the internal regulation structure to fulfill the needs with regard to the yellow book.

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(Broadus, 8)

Since the yellow book as well as the SAS No. 63 includes the function as well as reporting levels of the GAAS, the defining terms of reportable circumstances as well as material defects carry towards internal governmental regulation structural reports. The bearable limit in case of a situation of reporting is less compared to material form of weakness, even though a material form of weakness is a kind of situation of reporting. Nevertheless the dichotomy among a material form of weakness and other situations of reporting sometimes would be intricate to find out. Few illustrations of the internal regulation report areas as regards accounting in relation to revenue and receivables are (i) Criteria: The computer area of services operations symbolize a substantial part of the entity's net income. Correct data of revenue are important to make dependable statements of finance. (ii) Situation: Income from the new forms of computer services operations is taken by the accounting system of the computer services. The accounting system estimates the funds owed by the clients for usage of computer and assignments completed on task and contract orders, accounts receivable that are unbilled and income received. (Broadus, 8).....

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