What Is the Difference Between PCAOB and US GAAP?

PCAOB vs US GAAP: What Each One Governs

US GAAP (Generally Accepted Accounting Principles) simply refers to the standards for preparing financial statements. PCAOB standards, on the other hand, define how those financial statements are audited. Naturally, they work in parallel. Yet, not in place of one another.

• US GAAP governs what is reported — the accounting treatment, disclosures, and presentation format
• PCAOB audit standards govern how it is verified — the process auditors must follow to test financial accuracy and compliance

In other words, the financial statements created under GAAP are what the auditors evaluate using PCAOB audit standards. These are not competing frameworks—they are complementary.

Who Uses These Standards?

• Public companies listed on U.S. stock exchanges
• SEC registrants, including SPACs and broker-dealers
• Certain foreign companies accessing U.S. capital markets

These entities should prepare financials under GAAP and have them examined under PCAOB audit standards. In contrast, private companies may follow GAAP. Yet, they are typically audited under GAAS (Generally Accepted Auditing Standards) issued by the AICPA.

This makes PCAOB vs GAAS a more appropriate comparison when discussing audit frameworks. GAAP governs reporting for both private and public entities, while PCAOB governs auditing for public-facing ones.

Different Objectives

The distinction also lies in the intent:

• GAAP ensures consistency as well as transparency in how numbers are recorded
• PCAOB ensures integrity in the review process of those numbers—especially in matters like internal control testing and fraud risk

It should be recognized that GAAP is not concerned with how well the audit is conducted, and PCAOB is not concerned with whether an asset is recorded using the right depreciation method. Each holds its own lane.

Key Takeaway

In the context of how a PCAOB audit is different from a normal audit, the distinction between PCAOB vs US GAAP enables clearer communication between preparers, auditors, and regulators, as well as investors. GAAP sets the language of the financials. PCAOB makes sure that the translation is honest, complete, and tested.

For professional assistance in PCAOB audits, Dimov Audit presents more than 14 years of expertise.