consulting services to their audit clients as well as to other clients who do not use their attest services.) What follows is a description of the principal attest services.
Audits: The most important and relevant attest service to this article is auditing: "Auditing is the process by which a competent, independent person accumulates and evaluates evidence about quantifiable information related to a specific economic entity for the purpose of determining and reporting on the degree of correspondence between quantifiable information and established criteria." ALVIN A. ARENS AND JAMES K. LOEBBECKE, AUDITING: AN INTEGRATED APPROACH 2 (5th ed. 1991). In other words, auditing emphasizes the determination of whether the recorded financial information of an entity properly reflects the economic events that occurred during the accounting period. The outcome of the independent audit engagement is the issuance of the audit report. This report states the opinion of the CPA or CPA firm as to the fairness of presentation of the entity's financial statements under audit. The benchmark used to evaluate the fairness is Generally Accepted Accounting Principles (GAAP). GAAP is codified in numbered pronouncements and statements published by the Financial Accounting Standards Board (FASB) and its predecessors. The FASB is an independent standards setting organization established by the accounting profession in the early 1970s. See 1 ORIGINAL PRONOUNCEMENTS, Accounting Standards, FASB Statements of Standards (Fin. Accounting Standards Bd. 1990). The audit opinion represents the positive assurance of the CPA regarding the fairness of the financial statements, which includes the financial health of the entity being audited.
Generally Accepted Auditing Standards (GAAS) are the minimum standards that an auditor must follow in conducting an audit engagement. The codified GAAS is issued by the AICPA and are general in nature; nevertheless, they are enforceable. See 1 AICPA PROFESSIONAL STANDARDS, U.S. Auditing Standards (Am. Inst. of Certified Pub. Accountants (CCH) 1990). Along with GAAS, the auditor relies on other professional pronouncements by the AICPA. For auditing, these professional pronouncements are called the Statements on Auditing Standards (SASs). Id. all sections, at 51-2343. The SASs give more specific guidance, including examples, to CPAs regarding the conduct of audit engagements. However, the SASs are not intended to usurp auditor judgment which is paramount to the execution of a specific audit engagement. Yet, typically during lawsuit proceedings, reference will be made to compliance with GAAS and the SASs. See WANDA A. WALLACE, AUDITING 235-36 (2d ed. 1991).
The SASs discuss a multitude of topics, including the types of: (1) audit reports that can be issued; (2) evidence that can be collected; (3) audit procedures that can be performed; and (4) audit tools that can be used. Nevertheless, the SASs do not cover all issues that an auditor may encounter on a given audit engagement because new accounting issues are always emerging. In addition, the SASs do not tell the auditor specifically what to do for a particular set of client circumstances. These decisions are left to the individual auditor based on his or her professional judgment. However, there are common audit procedures that are performed in many audit engagements. For example, the SASs indicate that auditors should observe the client company's physical inventory when those inventories are considered material to the client's financial statements. 1 AICPA PROFESSIONAL STANDARDS, U.S. Auditing Standards, AU section 331, at 331-33 (Am. Inst. of Certified Pub. Accountants (CCH) 1990). Likewise, the SASs recommend that the auditor should confirm the client's accounts receivable with customers if