Question

Shipeng Han Chapter 2: Discuss the trade-off between guidelines defined specifically and broadly. Why current auditing standards do not define very specific guidance?

Answer 1

Guidelines can be defined as a general rule or principal or advise regarding something what exactly it is and how it should be done which ultimately helps to form an opinion it.

In order to ensure consistency, accuracy and accountability, an auditor is required to follow auditing standards and guidelines prescribed to achieve the desired result. Generally Accepted Auditing Standards are systematically designed guidelines used by the auditors to perform their audit work. Guidelines prescribed by the authority can be specific or broad in nature.

Specific guidelines are the general rules which are laid on some particular situation or circumstance. Some of the specific guidelines are standards on review engagements, standards on assurance engagements, standards on related services etc. Whereas, the guidelines defined broadly are the guidelines prescribed in general to all enterprises on a wider term and not on particular situation or circumstance. Some of the examples are agreeing the terms of audit engagements, audit documentation etc.

Specific guidelines focus on clearly defined or identified area. But, the guidelines defined broadly focus on larger area and has wider scope.

Current auditing standards do not define very specific guidance due to the reason of the professional requirement an auditor should require. It is the responsibility of the auditor to carry out their audit work from engagement to completion of audit as per the professional requirements prescribed by the auditing standards. To ensure that the information provided by way of financial statement to different users contains high quality work, for better understanding and is acceptable on a larger scale world wide, an auditing standards are required to be broad rather than specific.