2. Answer the following questions:

1. What do general standards relate to?

2. What is meant by ‘adequate technical training’?

3. What is meant by ‘adequate academic training’?

4. Why should an auditor be independent?

5. What is meant by ‘due professional care’?

6. What does due care require?

Text 15

1. Read and translate the text:

General standards

General standards relate to the qualifications of the auditor and the characteristics he or she should possess. General standards require that the auditor be trained and proficient, be independent in fact and appearance, and exhibit due professional care during the audit. These standards are discussed below.

1. The examination is to be performed by a person or persons having adequate technical training and proficiency as an auditor.

Auditors are expected to have adequate academic training in accounting, taxation, auditing, and other areas that relate to their profession. In addition, they should receive further training, both formal and informal, throughout their careers. This standard has several long-range implications for accountants who whish to grow professionally. They should pass the CPA examination. They should stay abreast of current developments in accounting, auditing, and tax matters. In fact, an increasing number of Jurisdictions now require CPAs to engage in continuing education to maintain their right to practice. In addition, firms that join the AICPA’s Division for CPA Firms are required, as previously noted, to provide their employees with a certain amount of continuing education. Finally, the CPA should be willing to acquire technical knowledge in new subject areas.

To ensure that individuals performing the audit examination have technical proficiency, firms implement quality control standards.

2. In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors.

The importance of the auditor’s independence is further reflected in Rule 101 of the Code of Professional Conduct which states:

a member in public practice shall be independent in the performance of professional services as required by standards promulgated by the Council.

Auditors must be independent in both fact and appearance. To be independent in fact, auditors must be intellectually honest; to be recognized as independent, however, they must have no financial interest in the entity they are auditing. Other factors are also important. For example, auditors should not have a close relative in an important position within the entity they are auditing. Because it is impossible to provide rules for every situation in which independence may be an issue, auditors are expected to exercise judgment and use common sense at all times.

Firms implement quality control standards to enhance the independence of their personnel.

3. Due professional care is to be exercised in the performance of the examination and the preparation of the report.

“Due professional care” requires several important things of auditors. First, and most obvious, they should understand what they are doing and why they are doing it. If they are uncertain about any phase of the assignment, it is their responsibility to seek the guidance of their superior. Due care requires that auditors prepare working papers that are both accurate and complete. Working papers prepared in a careless and incomplete fashion bring into question the evidential matter that the auditor has gathered.

That typical audit involves the use of tests and samples. Thus, each item selected for testing must be carefully examined to ensure that due professional care has been followed.

Notes to the text:

stay abreast of – идти в ногу, не отставать, не відставати

promulgation - распространение, розповсюдження

to seek the guidance - обращаться за рекомендациями, звертатися за рекомендаціями

2.Answer the questions:

1. What do general standards refer to?

2. What do general standards require?

3. What are general standards?

4. What are auditors expected to have?

5. Why should auditors be independent in the performance of their professional services?

6. Why do firms implement quality control standards?