Auditing Standards Board

Auditing Standards Board
Name	Auditing Standards Board
Formation	1978
Type	Standards-setting body
Purpose	Auditing standards and pronouncements
Headquarters	New York City
Parent organization	American Institute of Certified Public Accountants

Contents

Auditing Standards Board The Auditing Standards Board served as a principal standards-setting body within the American Institute of Certified Public Accountants system, responsible for issuing authoritative pronouncements for auditors of non-public entities in the United States. Its mandate intersected with regulatory actors such as the Securities and Exchange Commission, the Financial Accounting Standards Board, and the Public Company Accounting Oversight Board, shaping audit practice through Statements on Auditing Standards and interpretive guidance. The Board’s work affected practitioners, firms, and stakeholders including Ernst & Young, Deloitte, KPMG, PricewaterhouseCoopers, and numerous regional firms, while engaging with academic institutions like Columbia University, University of Chicago, and Stanford University.

History

Founded in 1978 under the auspices of the American Institute of Certified Public Accountants, the Board emerged amid debates following the Foreign Corrupt Practices Act and evolving capital market oversight influenced by the Securities Act of 1933 and the Securities Exchange Act of 1934. Early actions addressed auditing challenges raised after events linked to firms such as Arthur Andersen and regulatory responses tied to the Sarbanes–Oxley Act of 2002. Over time the Board’s agenda reflected developments associated with Generally Accepted Accounting Principles promulgated by the Financial Accounting Standards Board and monitoring by the Public Company Accounting Oversight Board. High-profile corporate failures including Enron and WorldCom precipitated shifts in standard emphasis and coordination with agencies like the Department of Justice and committees of the United States Senate.

The Board comprised practitioners, academics, and public members appointed through processes involving the American Institute of Certified Public Accountants leadership and advisory groups including the AICPA Council and specialty committees. Membership historically included partners from networks such as Ernst & Young, Deloitte, KPMG, and PricewaterhouseCoopers, as well as scholars from institutions like Harvard University, Yale University, and University of Michigan. The Board coordinated with task forces drawn from organizations such as the Institute of Internal Auditors and liaisons from the Public Company Accounting Oversight Board and the Securities and Exchange Commission. Executive oversight and administrative support interacted with offices including the AICPA Professional Ethics Division and the AICPA Chief Auditor’s Office.

The Board used exposure drafts, public comment, and redrafting phases typical of standards bodies, issuing Statements on Auditing Standards after deliberation and input from stakeholders such as the Securities and Exchange Commission, the Public Company Accounting Oversight Board, and firm networks including Baker Tilly and BDO International. Procedural linkages reflected earlier precedent from panels like the Treadway Commission and coordinated with accounting standard issuers including the Financial Accounting Standards Board and international counterparts such as the International Auditing and Assurance Standards Board. Public roundtables often featured participation by representatives of Congressional Committees, legal counsel from firms like Skadden, Arps, Slate, Meagher & Flom, and academics from New York University and University of Pennsylvania.

The Board produced Statements on Auditing Standards addressing audit planning, risk assessment, internal control, substantive procedures, and reporting practices, intersecting with pronouncements by the Financial Accounting Standards Board and the Public Company Accounting Oversight Board. Key topics included auditor independence rules influenced by guidance from the Securities and Exchange Commission and ethical interpretations aligning with pronouncements from the AICPA Professional Ethics Division. Pronouncements often referenced methodologies adopted in literature from American Accounting Association conferences and cases studied at schools like Columbia Business School and London Business School.

The Board’s outputs interacted closely with the Public Company Accounting Oversight Board, particularly after the passage of the Sarbanes–Oxley Act of 2002, and coordinated with the Securities and Exchange Commission on interpretive matters. International liaison occurred with the International Federation of Accountants and the International Auditing and Assurance Standards Board, affecting convergence efforts with the European Commission regulatory initiatives and national authorities such as the Financial Conduct Authority in the United Kingdom. The Board also maintained professional links with standard-setters like the National Association of State Boards of Accountancy and advisory input from centers such as the Brookings Institution and the Pew Charitable Trusts.

Critics cited potential conflicts of interest due to practitioner-dominated membership and ties to major networks including Arthur Andersen prior to its dissolution, Ernst & Young, Deloitte, KPMG, and PricewaterhouseCoopers. Debates involved responsiveness to corporate failures such as Enron and WorldCom, and tensions with enforcement actions by the Securities and Exchange Commission and prosecutions led by the Department of Justice. Academic critiques surfaced from scholars associated with Harvard Law School, Yale Law School, and University of California, Berkeley regarding transparency, independence, and standard adequacy in addressing complex financial instruments referenced in rulemaking by the Financial Accounting Standards Board. International observers from the International Federation of Accountants and policymakers in the European Commission raised questions about harmonization and global audit quality.

Category:Accounting standards