Question

Assignment:

Please Answer the question below. It should show your analysis and critical thinking and is generally 2-3 paragraphs.

1: What are GAAP and GAAS? Why are they important to IT audit?

Answer 1

Answer:

GAAP (Generally Accepted Accounting Principles) and GAAS (Generally Accepted Auditing Standards) are the two standards to prevent businesses from manipulating the numbers to make their finances appear differently from the true circumstances.

GAAP contains business accounting standards that the businesses are required to prepare the financial statements in terms of everyday financial dealings, maintaining the accounting system and developing accounting policies.

GAAS provides the standards to check the existing accounting rules and regulations prepared by GAAP. GAAS can help review the financial statements for accuracy and completeness. It also helps to identify errors or fraud.

The Accounting Board designs GAAP, therefore it consists of Statements of Financial Accounting Standards which includes general rules, standards and conventions of preparing financial statements. Also, GAAP allows for different interpretations, so businesses may legally prepare their financial statements in various ways. GAAS is the business standard which evaluates the business' general accounting standards, fieldwork standards and reporting standards.

GAAP and GAAS are required to prevent businesses from manipulating the numbers to make their finances appear differently from the true circumstances.