AICPA Field Work Standards

GAO-03-673G Government Auditing Standards > Chapter 4 Field Work Standards for Financial Audits > AICPA Field Work Standards

4.03 The three AICPA generally accepted standards of field work are as follows:

a. The work is to be adequately planned, and assistants, if any, are to be properly supervised.

b. A sufficient understanding of internal control1 is to be obtained to plan the audit and to determine the nature, timing, and extent of tests to be performed.

c. Sufficient competent evidential matter is to be obtained through inspection, observation, inquiries, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under audit.

4.04 Auditors should use professional judgment and consider the needs of users in applying the AICPA standards and related guidance to audits of a government entity or an entity that receives government awards. For example, auditors may need to set lower materiality levels than in audits in the private sector because of the public accountability of the audited entity, various legal and regulatory requirements, and the visibility and sensitivity of government programs. Also, auditors need to be sensitive to the concerns of oversight officials regarding previously reported internal control deficiencies of the audited entity and, accordingly, may need to test the effectiveness of internal control that have been changed in response to reported deficiencies even if auditors do not plan to rely on the effectiveness of such internal control.

1The AICPA standards incorporate the concepts contained in Internal Control - Integrated Framework, published by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Internal control consists of five interrelated components, which are (1) control environment, (2) risk assessment, (3) control activities,
(4) information and communication, and (5) monitoring. The objectives of internal control relate to (1) financial reporting, (2) operations, and (3) compliance. Safeguarding of assets is a subset of these objectives. In that respect, internal control should be designed to provide reasonable assurance regarding prevention of or prompt detection of unauthorized acquisition, use, or disposition of assets.