Government Auditing Standards: 2010 Exposure Draft

Image via WikipediaAugust 2010

TO AUDIT OFFICIALS AND OTHERS INTERESTED IN GOVERNMENT AUDITING STANDARDS

GAO invites your comments on the accompanying proposed changes to Government Auditing Standards (GAGAS), commonly known as the “Yellow Book.” This letter describes the process used by GAO for revising GAGAS, summarizes the proposed major changes, discusses proposed effective dates, and provides instructions for submitting comments on the proposed standards.

Process for Revising GAGAS

To help ensure that the standards continue to meet the needs of the audit community and the public it serves, the Comptroller General of the United States appointed the Advisory Council on Government Auditing Standards to review the standards and recommend necessary changes.
The Advisory Council includes experts in financial and performance auditing drawn from federal, state, and local government, the private sector, public accounting, and academia. This exposure draft includes the Advisory Council’s input regarding the proposed changes. We are currently requesting public comments on the proposed revisions in the exposure draft.

Summary of Major Changes

The proposed revision to GAGAS will be the sixth since GAO first issued the standards in 1972. The proposed changes contained in the 2010 Exposure Draft update GAGAS to reflect major developments in the accountability and audit profession and emphasize specific considerations applicable to the government environment.

The major changes in the proposed revision were made to:
•  consolidate and reorganize the foundation and ethical principles for government audits and the standards for use and application of GAGAS (chapters 1 and 2);
•  add a conceptual framework approach for independence (chapter 3);
•  update the financial audit standards to  (1) reflect recent updates to the auditing standards issued by the American Institute of Certified Public Accountants (AICPA), where applicable, (2) more clearly identify the GAGAS requirements and guidance that supplement AICPA requirements for financial audits, and (3) consolidate the financial audit standards into a single chapter (chapter 4);

Enclosure 1 to this letter contains a more comprehensive listing of the major changes.

 Effective Dates

When issued in final form, the 2011 revision will supersede the July 2007 revision of the standards and the guidance provided in Government Auditing Standards: Answers to Independence Standard Questions (GAO-02-870G). The effective date for the 2011 revision of GAGAS will be established when the standards are issued in final form.

 Instructions for Commenting

The draft of the proposed changes to Government Auditing Standards, 2010 Exposure Draft, is only available in electronic format and can be downloaded from GAO’s Yellow Book Web Page at http://www.gao.gov/govaud/ybk01.htm.

We are requesting comments on this draft from audit officials and financial management at all levels of government, the public accounting profession, academia, professional organizations, public interest groups, and other interested parties. To assist you in developing your comments, specific issues are presented in enclosure 2 to this letter.

We encourage you to comment on these issues and any additional issues that you note. Please associate your comments with specific references to question numbers in the enclosure and/or paragraph numbers in the proposed standards and provide your rationale for any suggested changes, along with suggested revised language. Please send your comments electronically to yellowbook@gao.gov no later than November 22, 2010.

If you need additional information please call Michael Hrapsky, Specialist, Auditing Standards, at (202) 512-9535, or Jim Dalkin, Director, at (202) 512-3133.

Sincerely yours,

Jeanette M. Franzel
Managing Director
Financial Management and Assurance
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