By GreenGrowth CPAs Audit & Assurance Team · Updated October 2026 · Audit & Assurance
GAAP vs GAAS comes down to who does what. GAAP is the set of accounting rules a company follows to prepare its financial statements. GAAS is the set of auditing rules a CPA follows to test those statements and issue an opinion.
The two work as a pair. Management applies GAAP. The auditor applies GAAS to check whether management got GAAP right. Public companies add a third layer, because their auditors follow PCAOB standards instead of GAAS.
This guide covers who writes each rule set, when each applies, and where IFRS fits in.
QUICK ANSWER
GAAP (Generally Accepted Accounting Principles) tells a company how to record and report its finances. In the US, the FASB sets it through the Accounting Standards Codification. GAAS (Generally Accepted Auditing Standards) tells an auditor how to audit those financial statements. The AICPA's Auditing Standards Board sets GAAS for private companies. Audits of public companies follow PCAOB standards instead.
GAAP vs GAAS: At a Glance
- GAAP is for preparers: It governs recognition, measurement, presentation, and disclosure in financial statements.
- GAAS is for auditors: It governs how a CPA plans, performs, and reports on an audit.
- Different standard setters: FASB writes GAAP. The AICPA Auditing Standards Board writes GAAS. The PCAOB writes public company audit standards.
- Where to find them: GAAP lives in the FASB ASC. GAAS lives in the AU-C sections. PCAOB standards use the AS numbering.
- IFRS is the global alternative: Many countries use IFRS instead of US GAAP. US domestic SEC filers must use US GAAP.
- Our role: We prepare GAAP statements and audit them, as separate teams. Talk to our team →
Quick Definition
GAAP answers the question "How should this transaction appear in the financial statements?" GAAS answers a different question: "How much evidence does the auditor need before signing an opinion on them?"
One is a reporting framework. The other is a performance standard for auditors. A company can follow GAAP and never get audited. An auditor, though, always measures the statements against some framework, and in the US that is usually GAAP.
What Is GAAP?
US GAAP is the body of accounting principles that US companies use for general purpose financial statements. It covers revenue recognition, leases, inventory, income taxes, business combinations, and much more. It also dictates what the balance sheet, income statement, and cash flow statement must show, and which notes they need.
GAAP changes over time. FASB issues Accounting Standards Updates (ASUs) that amend the Codification. Our overview of recent US GAAP standards covers several recent changes.
What Is GAAS?
GAAS is the set of standards that governs audits of private company financial statements in the US. It sets the auditor's objectives and requirements. These include independence, professional skepticism, risk assessment, evidence gathering, and the form of the audit report.
GAAS does not tell a company how to account for anything. It tells the auditor how to decide whether the company's own accounting is fairly presented. The goal is reasonable assurance, which AICPA standards describe as a high, but not absolute, level of assurance.
Who Issues GAAP vs GAAS?
GAAP: The Financial Accounting Standards Board (FASB) is an independent, private sector body overseen by the Financial Accounting Foundation. In a 2003 policy statement, the SEC recognized FASB standards as "generally accepted" for federal securities law purposes. A sister board, the GASB, sets GAAP for state and local governments.
GAAS: The AICPA's Auditing Standards Board (ASB) issues Statements on Auditing Standards (SASs). These apply to audits of nonissuers, meaning entities whose audits do not have to follow PCAOB standards.
PCAOB standards: The Public Company Accounting Oversight Board, created by the Sarbanes-Oxley Act of 2002, sets auditing standards for audits of SEC issuers and SEC-registered broker-dealers. The SEC must approve its standards.
When GAAP vs GAAS Applies
Ask two questions. First, who prepares the statements and under what framework? Second, who audits them and under which auditing standards? The table below maps the common answers.
▶ GAAP vs GAAS vs PCAOB vs IFRS
| Standard | Type | Set by | Applies to | Where it lives |
|---|---|---|---|---|
| US GAAP | Accounting framework | FASB (GASB for governments) | US companies preparing GAAP financial statements; required for US domestic SEC filers | FASB Accounting Standards Codification (ASC) |
| GAAS | Auditing standards | AICPA Auditing Standards Board | Audits of private companies and other nonissuers | Clarified SASs, codified as AU-C sections |
| PCAOB standards | Auditing standards | PCAOB, with SEC approval | Audits of SEC issuers and registered broker-dealers | AS 1000 to AS 4000 series |
| IFRS | Accounting framework | International Accounting Standards Board (IASB) | Companies in many other countries; foreign private issuers in the US may file IFRS as issued by the IASB | IFRS Accounting Standards |
| ISA | Auditing standards | International Auditing and Assurance Standards Board (IAASB) | Audits in jurisdictions that adopt ISAs | International Standards on Auditing |
Note the pattern. Accounting frameworks pair with auditing standards, and the pairs can mix. A US private company might follow US GAAP and get a GAAS audit. A foreign private issuer listed in the US might report under IFRS and get a PCAOB audit.
GAAP Framework (FASB ASC)
FASB launched the Accounting Standards Codification on July 1, 2009. It became the single source of authoritative nongovernmental US GAAP for periods ending after September 15, 2009. Older FASB statements and other legacy literature were folded into it.
The ASC organizes GAAP by topic. Topic 606 covers revenue from contracts with customers. Topic 842 covers leases, and Topic 740 covers income taxes. Each topic has a consistent structure, which makes research easier for preparers and auditors alike. For SEC registrants, the Codification also includes relevant SEC guidance in separate sections.
Private companies have some flexibility. The Private Company Council works with FASB on alternatives, such as simpler goodwill accounting, that private companies may elect within GAAP.
GAAS Framework (AICPA SAS)
The ASB redrafted its standards in its Clarity Project. The clarified standards, codified as AU-C sections, took effect for audits of periods ending on or after December 15, 2012. Each section now states the auditor's objective and the requirements needed to meet it.
Key sections include AU-C 200 on overall objectives and AU-C 315 on risk assessment. AU-C 700 covers forming an opinion and reporting. The ASB keeps issuing new SASs, so the AU-C sections change over time, much like the ASC.
💬 The Conversation Worth Having
Finance teams sometimes ask their auditor to "just fix" a GAAP issue during fieldwork. That request blurs the line between preparer and auditor. Independence rules limit how much of your accounting the auditor can do. Get a GAAP-ready close from your own team or a separate accounting provider. Then let the audit test it.
How GAAP and GAAS Interact
GAAP supplies the criteria. GAAS supplies the method. The auditor's opinion states whether the financial statements are presented fairly, in all material respects, in accordance with the applicable framework. That framework is often US GAAP.
This also answers a common question about ISA audits. The auditing procedures under ISA stay the same whether a company reports under IFRS or US GAAP. What changes is the yardstick. The auditor tests compliance with whichever framework the company uses and names it in the opinion.
Strong GAAP accounting makes the audit smoother. Our accounting and financial services team builds closes that stand up to testing. Our audit and assurance services team then audits under GAAS or PCAOB standards. Unsure whether you need an audit at all? Read our guide to audit vs assurance.
Getting ready for a first audit? We will check your GAAP readiness before fieldwork starts.
Ask Our Team →Private GAAP vs PCAOB Standards
A company that registers securities with the SEC moves from GAAS audits to PCAOB audits. The accounting framework stays US GAAP for domestic filers. Audit requirements tighten, though.
- Numbering: PCAOB standards were reorganized into the AS 1000 to AS 4000 series, effective December 31, 2016.
- New foundation standard: AS 1000 on general responsibilities applies to audits of fiscal years beginning on or after December 15, 2024.
- Critical audit matters: AS 3101 requires the auditor's report to describe CAMs for most issuer audits.
- Internal control: Accelerated and large accelerated filers generally also need an audit of internal control over financial reporting under AS 2201.
- Quarterly reviews: Auditors review interim financial information under AS 4105 before each Form 10-Q.
Planning an IPO or registration? Our guide to PCAOB audit requirements explains what an S-1 needs. Our public company audit services support companies once they are listed.
KEY TAKEAWAYS
- ›GAAP is how a company prepares its financial statements. GAAS is how an auditor tests them.
- ›FASB sets US GAAP through the ASC. The AICPA Auditing Standards Board sets GAAS in the AU-C sections.
- ›Public company audits follow PCAOB standards, not GAAS.
- ›IFRS is the main global alternative to US GAAP. ISA is the global counterpart to GAAS.
- ›Clean GAAP books lead to faster, cheaper audits. Keep preparer and auditor roles separate.
Frequently Asked Questions
The basics
GAAP stands for Generally Accepted Accounting Principles. It tells a company how to record transactions and present its financial statements. GAAS stands for Generally Accepted Auditing Standards. It tells an independent auditor how to plan and perform an audit, then report on those statements.
In short, management follows GAAP and the auditor follows GAAS. The auditor's opinion states whether the statements are fairly presented in accordance with GAAP or another framework. Public company audits follow PCAOB standards instead of GAAS.
The Financial Accounting Standards Board (FASB) sets US GAAP for businesses and nonprofits. FASB is an independent, private sector body overseen by the Financial Accounting Foundation. The SEC recognizes FASB standards as generally accepted for federal securities law purposes.
FASB publishes GAAP in the Accounting Standards Codification and amends it through Accounting Standards Updates. A sister board, the Governmental Accounting Standards Board (GASB), sets GAAP for state and local governments.
The AICPA's Auditing Standards Board sets GAAS. It issues Statements on Auditing Standards, which are codified as AU-C sections in the AICPA professional standards. These clarified standards took effect for audits of periods ending on or after December 15, 2012.
GAAS applies to audits of nonissuers, such as private companies and many nonprofits. Audits of SEC issuers and registered broker-dealers follow PCAOB auditing standards instead.
Private vs public
No federal law requires most private companies to use GAAP. In practice, many still do. Lenders, investors, buyers, and auditors often require GAAP financial statements, and loan agreements frequently spell this out.
Some private companies use other frameworks, such as the cash or tax basis, when their readers accept them. The Private Company Council, working with FASB, has also added simpler alternatives within GAAP. If you plan to raise capital, sell, or go public, adopting GAAP early avoids painful restatements later.
Both are auditing standards, but they cover different audits. The PCAOB sets standards for audits of SEC issuers and registered broker-dealers, with SEC approval. The AICPA's Auditing Standards Board sets GAAS for audits of private companies and other nonissuers.
PCAOB standards use AS numbering, such as AS 3101 for the auditor's report. They include requirements GAAS does not, such as reporting critical audit matters. Larger filers generally also need an integrated audit of internal control under AS 2201.
An accountant records transactions and prepares financial statements, usually following GAAP. An auditor independently examines those statements and gives an opinion on whether they are fairly presented. The auditor follows GAAS or PCAOB standards.
The key difference is independence. An auditor cannot audit work they effectively created. In the US, state accountancy laws generally reserve audit reports for licensed CPA firms. Many CPA firms offer both services, but they must keep the roles separate for any one client.
Where to Go From Here
GAAP-Ready Books and an Audit That Holds Up
Whether you need GAAP financial statements, a GAAS audit, or a PCAOB audit for a public filing, our team can scope the work around your goals.
KEY FACTS
Know Which Standards Apply Before Your Auditor Arrives.
Book a free consultation with our audit and assurance team. We will map the accounting and auditing standards that apply to your company.
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