15 • 1

CHAPTER

15

TAXONOMY OF AUDITING

STANDARDS

Belverd E. Needles, Jr.

DePaul University

CONTENTS

15.1 Introduction 1
15.2 Importance of Auditing Standards
and Their Harmonization 2
15.3 The Auditor 5
(a) Title of Auditor and Source of
Authority 5
(b) Licensing Procedures and
Training 5
(c) Reciprocity 14
(i) European Community 14
(ii) Americas 14
(iii) GATT/GATS 15
15.4 Attest Function 15
(a) Organizations Audited 15

(b) Election of Auditor 15

(c) Objective or Purpose of Audit 15

(d) Source of Auditing Standards 24

15.5 Ethical Standards and Enforcement 24

(a) Ethical Standards and

Enforcement 24

(b) Legal Liability and the

Detection of Fraud 33

15.6 Independence 33

15.7 Audit Reports 38

15.8 Summary 38

SOURCES AND SUGGESTED

REFERENCES 43

15.1 INTRODUCTION. This chapter provides an overview of similarities and dif-
ferences in auditing standards in 18 countries. It focuses on broad legal and profes-
sional characteristics, as well as selected auditing procedures. Although the study
surveys mostly major industrialized countries throughout the world, choices were
made to represent countries on six continents and a cross-section of the contrasting

The author wishes to thank Thomas McDermott, retired partner of Ernst & Young, and Robert
Temkin, partner of Ernst & Young, for their assistance with the previous edition of this chapter. The au-
thor also wishes to thank the following individuals who provided assistance in updating the current text:
Juan Carlos Seltzer, Kennedy University (Argentina); Morley Lemon, University of Waterloo (Canada);
Salvador Ruiz-de-Chavez , National Center of Evaluation (Mexico); Martin Hoogendoorn, University of
Amsterdam (the Netherlands); Pauline Weetman, University of Strathclyde (United Kingdom); Giuseppe
Galassi, University of Parma (Italy); Alain Mikol, Groupe ESCP (France); Peter Moeller, Aachen Uni-
versity of Technology (Germany); Gunilla Arvidsson, Swedish Supervisory Board of Public Accountants
(Sweden); Sven-Arne Nilsson, Lund University (Sweden); Nonna Martinov, University of New South
Wales (Australia); Kazuo Hiramatsu, Kwansei Gakuin University (Japan); Zhijun Lin, University of
Hong Kong (China); In Ki Joo, Yonsei University (Korea); Teresita Nadurata, De la Salle University
(Philippines); Tan Teck Meng, Singapore Management University (Singapore).