What Are the Principles of Auditing?

July 22, 2022   |   Blog

What Are the Principles of Auditing?

Every organization must ensure that its financial statements are correct and comply with all applicable federal and state regulations. Auditing is the process of reviewing these records and information to verify their accuracy. An audit can also serve as an internal control mechanism for detecting red flags that may indicate the existence of fraudulent financial activities.

A major part of audits is following auditing principles, which are a set of rules that guide companies and individual accountants as they work with complex financial data. These principles provide accountants with a strong foundation and help them deliver accurate results to their clients. Proficient accountants follow these principles during each audit they work on to help their clients maintain their compliance.

Understanding Basic Audit Principles

The American Institute of Certified Public Accountants (AICPA) is a national professional organization that establishes the auditing and ethical standards in the United States. The AICPA has developed a set of audit principles to guide auditors as they perform their duties:

  • Training: All auditors must have the appropriate training to plan and execute the various audit types across all industries.
  • Independence: Auditors must have no financial, relational or operational ties to whatever institution they’re auditing to avoid potential conflicts of interest, bias and approval without evidence.
  • Due care: An auditor should possess the same level of skills and competence as their peers within the same industry and employment.
  • Planning and supervision: Auditors must be involved in planning and supervising their work to provide an accurate, informed opinion of their findings.
  • Understanding: Auditors must possess or gain a comprehensive understanding of the industry, the organization and its internal control processes to plan audit procedures for appropriate risks properly.
  • Evidence: An auditor typically should ask for appropriate proof or documentation that supports the line item entries listed in the financial statements.
  • Generally accepted accounting principles (GAAP) compliance: The auditor must verify that the organization is presenting its financial statements in accordance with the industry’s generally accepted accounting principles.
  • GAAP exceptions: The audit report must identify instances where GAAP compliance does not exist.
  • Disclosures: Auditors must verify that any information disclosed about the financial statement line items is adequate.
  • Opinion: Auditors must provide an opinion based on their findings during the audit process. If they choose not to state an opinion, they must give their reasons for doing so.
  • Confidentiality: Auditors must maintain confidentiality, as their client entrusts highly sensitive financial information to them. An auditor must seek the client’s permission before disclosing information to uninvolved parties.

Auditing Principles in Context

Some real-world examples of these auditing principles include:


It is essential for auditors to be transparent about their actions and discoveries. For example, auditors should not withhold vital information from their clients or issue their clients false information. An institution trusts its auditor to provide a true opinion of its financial data and relies on the auditor to disclose any valuable insights.

Unbiased Opinions 

Auditors cannot allow their personal feelings and opinions to influence their decisions as they conduct audits. Maintaining an unbiased opinion may be challenging if the auditor has a personal or professional relationship with their client, as this is a conflict of interest. That’s why it’s crucial not to have any ties to the institution they are auditing. Remaining unbiased will enable an auditor to demonstrate their expert auditing skills and provide their client with an accurate opinion on their financial information.

Evidence-Based Results

An auditor must be able to back up every line item with supporting documents, such as payroll reports, receipts and invoices. A thorough track record ensures that auditing results are accurate and allows the auditor to provide a true representation of the client’s financial information.

Why Do the Principles of Auditing Matter?

Whether you are selling your company, trying to win an investor or simply looking for financial growth opportunities, audits can benefit your business. However, you’ll only receive these benefits with a trusted auditor. You can have confidence in your auditor when they provide evidence that they follow the principles of auditing.

When you’re preparing for an audit, be sure to hire reputable auditors. Look for a provider with sufficient industry experience and evaluate their history by checking their licenses and other credentials. This information can help you select an auditor who implements the principles of auditing in their work.

Learn More About the Audit Principles

Learn More About the Audit Principles

At Marshall Jones, our team of experienced Certified Public Accountants and Advisors has followed our audit principles for more than 30 years. We assist businesses, nonprofit organizations and individuals throughout the Atlanta area to ensure the accuracy of their financial statements and help them avoid potentially costly mistakes. 

Contact us for more information and learn more about how Marshall Jones demonstrates trustworthy accounting principles and procedures for audits.