Auditing Hierarchy

As an accounting student it can be hard to remember and understand which standard setting organizational board is higher than the other, since most of the names of the organizations are very similar. This Auditing Hierarchy helps visualize which standard setting organization comes first and has more precedence in regards to Auditing standards.

Accounting Standards Setting Organizations Hierarchy in the United States

1. The American Institute of Certified Public Accountants (AICPA) is the largest accounting member organization which represents the accounting profession. The AICPA sets the ethical standards for the profession, the standards for audits of public and private companies, and professional standards for financial accounting.

• The Auditing Standards Board (ASB) is a special committee formed by the American Institute of Certified Public Accountants (AICPA) which develops standards regarding auditing, attestation and quality control systems of a firm.
  
  
  
  • Generally Accepted Auditing Standards (GAAS) were established by the Auditing Standards Board (ASB) and help assure the quality of an audit. They consist of 10 standards.
    
    
    
    • The Statement on Auditing Standards (SAS) are interpretations of the Generally Accepted Auditing Standards (GAAS). These interpretations are considered for both private and public companies.
      
      
      
      • The Public Company Accounting Oversight Board (PCAOB) was established after the Sarbanes Oxley Act of 2002 was passed. The PCAOB has some its own Auditing Standards (AS) which are specifically designed for audits of public companies.


• The Auditing Standards Board (ASB) and also the Senior Technical Bodies of the AICPA issue standards related to Attestation engagements.
  
  
  
  • Statements on Standards for Attestation Engagement (SSAE) are standards specifically designed and developed for attestation engagements. They consist of 11 standards.


• The Accounting and Review Services Committee (ARSC) is established by the AICPA. They are specifically designated to govern and develop pronouncements on all engagements of un-audited financial statements.
  
  
  
  • The Statements on Standards for Accounting and Review Services (SSARS) are pronouncements written by the ARSC that provide provisions and guidelines regarding compilations and reviews of financial statements.

2. The Government Accountability Office (GAO) is part of the legislative branch of United States Government. It was     established in 1921 pursuant the passing of the Budget and Accounting Act. The prime purpose of the act was to hold the federal government accountable to the American People.  It ensured American citizen the that government was meeting its constitutional responsibility by investigating how tax dollars were spent.

• Generally Accepted Governmental Auditing Standards (GAGAS) also referred to as the “Yellow Book” are produced by the Government Accountability Office. These standards are used by auditors of governmental entities and entities that receive government awards and assistance.

International Accounting Standards Setting Organizations Hierarchy

For International standards of Auditing, the International Federation of Accountants (IFAC), establish the international standards for auditing, ethics and assurance. IFAC is the global organization for the accounting profession. It was founded in 1977, with the goal  of establishing a common set of rules throughout the international accounting community.

• The International Auditing and Assurance Standards Board (IAASB) is an independent standard setting organization that forms principles for auditing, review, other assurance related services and standards related to a firms quality control.
  
  
  
  • International Standards on Auditing (ISA) are the internationally accepted standards formed for all audit engagements. These standards are issued by the International Auditing and Assurance Standards Board (IAASB).