Question

Which of the following statements is correct regarding the issuance of audit standards?

1) Prior to the creation of the PCAOB, the ASB was responsible for issuing audit standards that were used for the audits of public and private companies.
2) Prior to the creation of the ASB, the PCAOB was responsible for issuing audit standards that were used for the audits of public and private companies.
3) The ASB is currently responsible for issuing audit standards for the audits of public and private companies.
4) The PCAOB is currently responsible for issuing audit standards for the audits of public and private companies.

Answer 1

The correct statement regarding the issuance of audit standards is that the ASB was responsible for issuing audit standards for both public and private companies before the PCAOB's creation, while now the PCAOB issues standards for public companies and the ASB for private companies.

Step-by-step explanation:

The statement that is correct regarding the issuance of audit standards is that prior to the creation of the PCAOB, the ASB was responsible for issuing audit standards that were used for the audits of public and private companies. The PCAOB (Public Company Accounting Oversight Board) was established by the Sarbanes-Oxley Act of 2002 to oversee the audits of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The ASB (Auditing Standards Board) now primarily issues audit guidelines for private companies while the PCAOB is responsible for auditing standards for public companies. Therefore, the correct statement is option 1).