Evolution and Impact of Auditing Standards: A Comparative Study of GAAS and ISA

Abstract

The evolution of auditing standards has played a critical role in shaping
financial reporting and enhancing the credibility of financial statements. This study
provides a comparative analysis of Generally Accepted Auditing Standards (GAAS)
and International Standards on Auditing (ISA), highlighting their historical
development, key differences, and the ongoing debate regarding their convergence.
While both frameworks share common objectives—ensuring financial statement
reliability and guiding auditors—their differences in application across jurisdictions
have raised concerns about audit comparability in global markets. The study examines
the impact of regulatory changes, such as the Sarbanes-Oxley Act and the
establishment of the Public Company Accounting Oversight Board (PCAOB), on the
evolution of auditing standards in the United States. Additionally, the study explores
how international standard-setting bodies influence auditing practices worldwide. The research underscores the importance of harmonizing auditing standards to facilitate cross-border audits and enhance investor confidence. By analyzing the historical development, purpose, and implications of GAAS and ISA, this study provides insights into the future direction of auditing standards and their role in fostering transparency and financial accountability.