In the United States, the Financial Accounting Standards Board sets measurement and reporting standards for financial statements. For large companies, the Securities and Exchange Commission imposes some additional standards. The Auditing Standards Board of the American Institute of CPAs determines standards for conducting an audit. Similar bodies perform these functions in other countries. A major effort is being made to set worldwide standards.

Required

Describe and evaluate these standards, answering the following questions.

A. What are measurement and reporting standards?

B. Why are measurement and reporting standards important to users of financial statements?

C. What is an audit?

D. Why are auditing standards important to financial statement users?

E. What advantages and disadvantages do you see to having separate accounting and auditing standards for each country?