Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

What type of guidance is considered the most authoritative for the auditor of a nonissuer?

1. AICPA audit and accounting guide for the client's industry.

2. A Journal of Accountancy article.

3. General guidance from Statements on Auditing Standards.

4. Specific guidance from interpretations of SASs.

The correct answer is: General guidance from Statements on Auditing Standards.

The most authoritative guidance for the auditor of a nonissuer is derived from the Statements on Auditing Standards (SASs), which are established by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA). SASs provide the framework and principles that auditors must follow when conducting audits of nonpublic entities, ensuring consistency and reliability in the auditing process. The importance of SASs lies in their status as standards that are universally accepted within the auditing profession. They form a comprehensive body of guidelines that cover various aspects of the audit process, including planning, execution, reporting, and documentation. As such, SASs are designed to enhance the quality of audits, promote uniformity, and protect the interests of users of financial statements. While industry-specific guidance from AICPA audit and accounting guides is valuable, it is generally considered less authoritative than SASs. These guides provide practical insights and recommendations that can supplement the auditing standards but do not replace the need to comply with the fundamental principles outlined in SASs. Similarly, general guidance from SASs interpretations offers helpful insights but may not possess the same level of authority as the SASs themselves. Articles from professional publications, like the Journal of Accountancy, provide useful commentary and thought leadership;