GAO Releases New Government Auditing Standards for 2024

October 31, 2024

The U.S. Government Accountability Office (GAO) has recently released the 2024 revision of Government Auditing Standards, also known as the “Yellow Book.” This revision brings significant updates to the standards that govern financial audits, attestation engagements, reviews of financial statements, and performance audits conducted in the United States.

The GAO, as the governing body, sets the Government Auditing Standards. The Comptroller General of the United States appoints an esteemed Advisory Council on Government Auditing Standards, comprising financial and performance auditing experts from federal, state, and local government, private enterprise, public accounting, and academia. This Council plays a pivotal role in reviewing the standards periodically and recommending necessary changes.

The Government Auditing Standards 2024 Revision provides a framework for performing high-quality audit work with competence, integrity, objectivity, and independence. Such performance provides accountability and helps improve government operations and services. These standards are commonly referred to as generally accepted government auditing standards (GAGAS) and provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process.

The 2024 revision introduces several key changes that are set to significantly impact the auditing process. These changes include:

  • Emphasis on quality management: The standards now place greater emphasis on audit organizations’ leadership proactively managing quality on their engagements.
  • Scalability: The approach promotes a scalable system of quality management that can be adapted to fit the size and complexity of different audit organizations.
  • Risk-based approach: A risk-based process is introduced to achieve the objectives of quality management.
  • Transition from quality control to quality management: The standards shift from a focus on quality control to a broader emphasis on quality management.

Overall, the 2024 revision aims to enhance the quality and consistency of government audits, improve public trust in financial reporting, and strengthen accountability.

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Posted by Trudy Hawkins

Going “GAGAS” for the GAO Yellow Book

June 7, 2012

The name “Yellow Book” to many conjures memories of big yellow phone directories used with rotary dial phones.

However, in the Government auditing world, “Yellow Book” is the moniker given to the Government Auditing Standards manual, with its distinctive bright yellow cover that is issued by the Comptroller General of the United States in the Government Accountability Office (GAO). This was just revised for 2011 to replace the 2007 version.

For those not familiar with it, an audit is defined as “a systematic process of objectively obtaining and evaluating the accounts or financial records of a governmental, business, or other entity.” Any entity that receives Federal Government funding must have a periodic independent audit.

Auditors are going “GAGAS” over the Government Auditing Standards 2011 Revision

The motto of the Government Accountability Office (GAO) is “Accountability, Integrity, Reliability” and the “Yellow Book” publication provides the standards for all government auditors to deliver on these same goals. Specifically, the GAO describes the book as follows:

Government Auditing Standards (the “Yellow Book”) contains standards for audits of government organizations, programs, activities, and functions, and of government assistance received by contractors, nonprofit organizations, and other nongovernment organizations.

These standards, often referred to as Generally Accepted Government Auditing Standards or GAGAS, are to be followed by auditors and audit organizations when required by law, regulation, agreement, contract, or policy.

Who updates the GAGAS?

The GAO doesn’t go it alone in setting the standards. Instead, the Comptroller General of the United States appoints an Advisory Council on Government Auditing Standards to review the standards periodically and recommend necessary changes. The Council includes around 25 experts in financial and performance auditing drawn from federal, state and local government; private enterprise; public accounting; and academia.

Main Topics in the Yellow Book

US taxpayers should know that the “Yellow Book” helps ensure that government auditors know how to adhere to strict ethical principles and that observing integrity, objectivity and independence;  serving the public interest; and honoring the public trust are the primary goals of the Government auditing standards.

The types of findings auditors are instructed to provide in the “Yellow Book” include: deficiencies in internal control of the organization being audited; noncompliance with laws, regulations, contracts or grant agreements; and fraud or abuse.

I found the specific examples of what types of problems auditors were to look for particularly interesting:

  • Examples of Deficiencies in Internal Control:  Examples of possible control deficiencies that could be found include “insufficient control consciousness within the organization,” “evidence of intentional override of internal control by those in the authority to the detriment of the overall objectives”, and “employees or management who lack the qualifications and training to fulfill their assigned functions.”
  • Examples of Abuse: As if drawn straight from the news headlines, these examples of abuse include everything from “making travel choices that are contrary to existing travel policies or are unnecessarily extravagant or expensive” to “misusing the official’s position for personal gain.”
  • Examples of Fraud Risk: These point out problematic organizational circumstances that could give rise to fraud, such as “the organizational structure is unstable or unnecessarily complex,” “the entity has a history of impropriety,” or “economic or entity operating conditions threaten the entity’s financial stability, viability or budget.”
  • Threats to Independence: This guidance is for auditors to ensure they and their auditing organizations are sufficiently objective to perform the audit. Threats listed here include an audit organization having prepared the original data that are the subject of the current audit, “an auditor having biases associated with political, ideological, or social conditions…that could impact the auditor’s objectivity,” or “undue external interference” in how the audit is performed.

All in all, U.S. taxpayers will be pleased to know that such stringent Government auditing standards exist to ensure your money is being spent appropriately, and that the GAO’s Government Auditing Standards “Yellow Book” is there to show the way.

Source: Accounting-Financial-Tax

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About the Author:  Michele Bartram is Promotions Manager for GPO’s Publication and Information Sales Division and is responsible for online and offline marketing of the US Government Online Bookstore (Bookstore.gpo.gov) and promoting Federal government content to the public.

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Posted by Michele Bartram, U.S. Government Online Bookstore