The U.S. Government Accountability Office has issued the 2007 revision of Government Auditing Standards. These standards, which are commonly referred to as the “Yellow Book,” cover federal entities and those organizations receiving federal funds. Various laws require compliance with the comptroller general’s auditing standards in connection with audits of federal entities and funds. Furthermore, many states and local governments and other entities have voluntarily adopted these standards.
The 2007 revision contains the January 2007 revision plus updated quality control and peer review sections in chapter 3, which were exposed in January 2007. The 2007 revision supersedes the 2003 revision and contains fundamental changes that:
- Heighten the emphasis on ethical principles as the foundation, discipline, and structure behind the implementation of the standards, including a description of five key ethical principles that should guide the work of those who audit government programs and operations;
- Clarify and streamline the discussion of the impact of nonaudit services and their impact on auditor independence;
- Update the financial auditing standards based on recent developments in financial auditing and internal control, increased transparency surrounding restatements and significant concerns, uncertainties, or other unusual events that could have a significant impact on the financial condition or operations of a government entity or program;
- Enhance performance-auditing standards that elaborate on the overall framework for high-quality performance auditing, including the concepts of reasonable assurance and its relationship to audit risk, significance, and the levels of evidence used to support audit findings and conclusions;
- Clarify the standards through standardized language to define the auditor’s level of responsibility and distinguish between auditor requirements and additional guidance; and
- Reinforce the key role of auditing in maintaining accountability and providing information for making improvements in government operations.
The July 2007 revision of Government Auditing Standards is effective for financial audits and attestation engagements for periods beginning on or after January 1, 2008, and for performance audits beginning on or after January 1, 2008.
This revision of the standards went through an extensive deliberative process, including public comments and input from the Comptroller General’s Advisory Council on Government Auditing Standards. Brian Schebler, director of services to the public sector for McGladrey & Pullen, LLP, is a member of the 25-member Advisory Council.
The 2007 revision of Government Auditing Standards is available in full at http://www.gao.gov/govaud/d07731g.pdf.
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