The Generally Accepted Auditing Standards (NAGAS) are the principles and requirements that the auditor must meet in the performance of their duties so that they can express a responsible technical opinion, they are also called Technical Auditing Standards.
Classification of Generally Accepted Auditing Standards
These standards may differ from country to country (they are generally dictated by the accountants' college of each country) but, in general, there are 10 and are grouped into three main lines:
- Personal or general rules Rules relating to the execution of the work Rules relating to the preparation of reports
1. Personal or general rules
They regulate the conditions that the account auditor must meet and their behavior in the development of their activity.
- Training and professional capacity: The audit must be carried out by personnel with adequate technical training and criteria as an auditor. Obtaining the professional title of public accountant is not enough, but it is necessary to have constant training through seminars, talks, conferences, magazines, manuals, research papers, etc., and training in the field. Care and professional diligence: All professional care should be taken in the performance of the audit and in the preparation of the report. Due care imposes responsibility on each individual who makes up the organization for an independent audit and requires adherence to standards regarding work and reporting. The exercise of due care requires a critical review at each level of supervision of the work performed and the criteria used by those who participated in the examination. Professional capacity and care is a standard common to the profession of public accountant and to all professions that arise from the professional nature of the audit activity. While it is true that a professional cannot be considered infallible and, therefore, success cannot be required of him,the ability to perform professional activities or their negligence must be evaluated. Indeed, professional activity, as human, is fallible and it must be considered that the common people have not defined the concept of the scope of the audit - which is carried out on the basis of samples, selective evidence and, above all, of the opinion- when it refers to the fair presentation of the financial situation. Financial reasonableness depends on judgment and judgment is susceptible to error.of the opinion- when it refers to the fair presentation of the financial situation. Financial reasonableness depends on judgment and judgment is susceptible to error.of the opinion- when it refers to the fair presentation of the financial situation. Financial reasonableness depends on judgment and judgment is susceptible to error.Independence: For the interested parties to trust the financial information, it must be ruled by an independent public accountant who has accepted the audit work beforehand, since his opinion is not influenced by anyone, that is, his opinion is objective, free and impartial.
2. Rules relating to the execution of the work
Its purpose is to determine the means and actions that apply to the auditor in their exercise.
- Planning and supervision: The audit must be properly planned and the work of the assistants must be properly supervised. The audit of the financial statements requires an adequate operation to fully achieve the objectives in the most efficient way. The appointment of external auditors by the company must be carried out sufficiently in advance of the closing of the period subject to the examination, in order to allow the adequate planning of the auditor's work and the timely application of the audit standards and procedures (including international auditing standards and their conceptual framework). On the other hand, supervision must be exercised in the planning, execution and completion stages of the work. Evidence of the supervision exercised must be left in the work papers.Study and evaluation of internal control: The structure of internal control must be studied and evaluated appropriately to plan the audit and determine the nature, duration and scope of the tests to be performed. The auditor is only required to examine that part of the general system for the preparation of financial statements that is to be audited. This study and evaluation of internal control must be done each year, adopting a relative base of the evaluation areas and deepening its incidence in those areas where the greatest deficiencies are noted. Likewise, the auditor, when evaluating internal control, will determine its deficiencies, their seriousness and possible repercussions. If the failures are serious and the auditor does not replace that limitation in a practical way, he must qualify his opinion and give a qualified opinion or abstention of opinion.Obtaining sufficient and competent evidence: Sufficient evidence must be obtained through inspection, observation, inquiry and confirmation to provide a reasonable basis for the expression of an opinion on the audited financial statements. Evidence will be insufficient, for example, when it has not participated in an inventory taking, accounts receivable were not confirmed, etc.
3. Rules regarding the preparation of reports
The report of an auditor is the document by which a public accountant, acting independently, expresses his opinion on the financial statements submitted for his examination. The importance of the opinion has made it necessary to establish standards that regulate the quality and requirements for its proper preparation. It is made up of four NAGAS:
- Application of generally accepted accounting principles (GAAP): The report must state whether the financial statements are presented in accordance with GAAP. This standard requires the auditor to know the accounting principles and procedures, including the methods of their application. Consistency in the application of generally accepted accounting principles: for financial information to be comparable with previous and subsequent years, it is necessary to consider the same criteria and the same bases for applying generally accepted accounting principles, otherwise, the auditor should clearly state the nature of the changes. Sufficient disclosure. Unless the auditor's report indicates it, it will be understood that the financial statements present in a reasonable and appropriate way, all the information necessary to show and interpret them properly. Auditor's opinion. The opinion must express an opinion with respect to the financial statements taken as a whole or a statement to the effect that it cannot express an opinion as a whole. The objective of this rule, regarding the information of the opinion, is to avoid a misinterpretation of the degree of responsibility that is being assumed. The auditor should not forget that the justification for expressing an opinion, whether qualified or not, is based on the extent to which the scope of its examination has been in accordance with the NAGAS.
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In the following video, Dr. Nila Córdova Granda presents, with great success, each one of the Auditing Standards, it will surely be useful to you.
Bibliography
- Díaz Mejía, Jorge Luis. Difference between NIA and NAGA in Public Accounting in Colombia. In: Dictamen Libre, Issue No. 8, January - June 2011, pp. 32-38 Falconí Panana, Oscar. Auditing and Generally Accepted Auditing Standards. In: Accounting and business, Year 1, No. 2, November 2006, pp. 16-20
