Auditing and Attestation - Certified Public Accountant (CPA) Practice Exam 2026 - Free CPA Practice Questions and Study Guide

The auditor of a nonissuer, which refers to a company not offering its securities to the public, must conduct the audit in accordance with ASB (Auditing Standards Board) standards. These standards are specifically designed for audits of nonpublic entities and focus on the specific needs and circumstances of these types of organizations.

ASB standards are part of the Generally Accepted Auditing Standards (GAAS) and provide guidance that aligns with the expectations and requirements of nonpublic clients. They encompass various aspects of the audit process, including planning, evidence gathering, and reporting.

In contrast, PCAOB (Public Company Accounting Oversight Board) standards are developed for the audit of public companies and are not applicable to nonissuers. This distinction is crucial because the regulations and expectations for public companies differ significantly from those applied to private enterprises. Therefore, the correct direction for auditing nonissuers is to adhere strictly to ASB standards, ensuring compliance with the requirements tailored for those entities.