GAO proposes updates to ‘Yellow Book’ of government auditing standards
The Governmental Accountability Office has released proposed changes to government auditing standards – better known as the “Yellow Book.”
The eight key changes proposed by the GAO include the following:
- A new format differentiating requirements from application guidance. Chapters are reorganized and realigned, and supplemental guidance from the 2011 appendix is removed or incorporated.
- Further explanation of the independence requirements of the auditor when the engaging party differs from the responsible party, and guidance related to professional services in government.
- Expansion of the standard to state that any services performed by auditors related to preparing accounting records and financial statements (other than those defined as impairments to independence) create significant threats to auditors’ independence. Auditors should document the threats and safeguards applied to eliminate and reduce the threats to an acceptable level or decline to perform the services.
- Updated internal control requirements and guidance to align with the revised Standards for Internal Control in the Federal Government and Internal Control – Integrated Framework.
- Revised continuing professional education requirements.
- Revised peer review requirements.
- Statement on Standards for Attestation Engagements No. 18, ”Attestation Standards: Clarification and Recodification,” and Statement on Standards for Accounting and Review Services No. 21, section 90 (“Review of Financial Statements”), are incorporated into GAGAS for auditors conducting attestation engagements and reviews of financial statements, respectively.
- New requirements for reporting waste that is detected during an audit.
Government Advisory CouncilThe Advisory Council on Government Auditing Standards was established to provide input on the Yellow Book in an effort to keep the standards up-to-date and effective. Members of the Advisory Council include experts from federal, state, and local government; the private sector; and academia. The Advisory Council provided input on the proposed changes included in the exposure draft issued this month.
Public comment soughtThe GAO seeks public comment on the proposed changes. The comment deadline is July 6.
Learn more about the proposed changes by reading GAO’s Exposure Draft: Government Auditing Standards.
Learn more at our Government / NFP ConferenceGrant Simmons, the GAO’s assistant director of financial management and assurance, will lead a session on the GAO’s exposure draft at the MACPA’s 2017 Government and Not-for-Profit Conference, scheduled for April 28 at the College Park Marriott Hotel and Conference Center.
Concurrent sessions will include a FASB update from Jeff Mechanick, the FASB’s assistant director of non-public entities, and a GASB update from Keith Novak, principal, state and local government at CliftonLarsonAllen.
There are more than 24 additional sessions to choose from at the conference, and more than 400 people are currently registered to attend. Get further details and register here.