Auditing Standards Board (ASB)

The Auditing Standards Board (ASB), part of the AICPA, issues guidelines and rule pronouncements that CPAs must adhere to in audits and attestations. The ASB's mission is to serve the public interest by developing, updating and communicating comprehensive standards and practice guidance that enable certified public accountant practitioners to provide high-quality, objective audit and attestation services to nonissuers in an effective and efficient manner. It is a senior technical committee of the American Institute of Certified Public Accountants (AIPCA) and was created in 1978 to replace previous technical committees to be the highest authority in establishing generally accepted auditing standards (GAAS) in the United States.

As described by the AICPA, which has issued guidance to accountants and auditors since 1927, the Auditing Standards Board is its senior technical committee for auditing, attestation, quality control, reporting and performance monitoring. The ASB produces statements, standards and guidance to certified public accountants for non-public company audits. The Auditing Standards Board exists to improve existing and enable new audit and attestation services.

The Auditing Standards Board is made up of 20 members that are nominated by the director of the AICPA Audit and Attest Standards Staff. Each nominee must be approved by the AICPA Board of Directors. The board, as directed by its chairman, has the power to establish procedures and sub-committees, in addition to other related duties. The AICPA ensures that the ASB is diverse by reserving member seats for various segments of the accounting industry. For example:

• Four seats that represent the Big Four" accounting firms.
• Five seats for local, regional or national-level accounting firms that are not associated with the "Big Four."
• Five seats for National Association of State Board of Accountancy representatives.
• Six seats for various other public accountants that are AICPA members or private practitioners. These seats are typically reserved for academics or government-employed auditors or other public officials.

When considering and then making a pronouncement, ASB membership will discuss it internally, with the AICPA, and may also involve the public. Its periodic meetings include discussion of auditing issues, the preparation of public statements, and may also include public hearings. For any rules or pronouncements to be approved ASB members must vote on them and reach a two-thirds approval threshold. At that point, they may produce a draft proposal (or "exposure draft") or a final rule. The ASB publicizes its pronouncements and statements in The CPA Letter and via the AICPA website.