Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process.
Contents Letter 1
Chapter 1:
Foundation and Principles for the Use and Application of Government Auditing Standards 3
Introduction 3 Types of GAGAS Users 6 Types of GAGAS Engagements 7
Financial Audits 8
Attestation Engagements and Reviews of Financial Statements 10
Performance Audits 11 Terms Used in GAGAS 16
The GAGAS Format 17
Chapter 2:
General Requirements for Complying with Government Auditing Standards 19
Complying with GAGAS 19
Relationship between GAGAS and Other Professional Standards 21
Stating Compliance with GAGAS in the Audit Report 23
Chapter 3:
Ethics, Independence, and Professional Judgment 26
Ethical Principles 26
The Public Interest 27
Integrity 28
Objectivity 28
Proper Use of Government Information, Resources, and Positions 29
Professional Behavior 29
Independence 30
GAGAS Conceptual Framework Approach to Independence 32
Provision of Nonaudit Services to Audited Entities 45
Consideration of Specific Nonaudit Services 52
Documentation 59 Professional Judgment 60
Chapter 4:
Competence and Continuing Professional Education 68
Competence 68
Continuing Professional Education 73
Chapter 5:
Quality Control and Peer Review 87
Quality Control and Assurance 87
System of Quality Control 88
Leadership Responsibilities for Quality within the Audit Organization 88
Government Auditing Standards Independence, Legal, and Ethical Requirements 89
Initiation, Acceptance, and Continuance of Engagements 90
Human Resources 91 Engagement Performance 92
Monitoring of Quality 97
External Peer Review 102
Additional Requirements for Audit Organizations Not Affiliated with Recognized Organizations 109
Chapter 6:
Standards for Financial Audits 117
Additional GAGAS Requirements for Conducting Financial Audits 117
Compliance with Standards 117
Licensing and Certification 118
Auditor Communication 119
Results of Previous Engagements 120
Investigations or Legal Proceedings 120
Noncompliance with Provisions of Laws, Regulations, Contracts, and Grant Agreements 121 Findings 122
Audit Documentation 125
Availability of Individuals and Documentation 125
Additional GAGAS Requirements for Reporting on Financial Audits 126
Reporting the Auditors’ Compliance with GAGAS 126
Reporting on Internal Control; Compliance with Provisions of Laws, Regulations, Contracts, and Grant Agreements; and Instances of Fraud 127
Presenting Findings in the Audit Report 129
Reporting Findings Directly to Parties outside the Audited Entity 130
Obtaining and Reporting the Views of Responsible Officials 131
Reporting Confidential or Sensitive Information 133
Distributing Reports 134
Chapter 7:
Standards for Attestation Engagements and Reviews of Financial Statements 136
Examination Engagements 137
Compliance with Standards 137
Licensing and Certification 138
Auditor Communication 138
Results of Previous Engagements 139
Investigations or Legal Proceedings 140
Noncompliance with Provisions of Laws, Regulations, Contracts, and Grant Agreements 141 Findings 141
Page v GAO-21-368G Government Auditing Standards Examination Engagement Documentation 144
Availability of Individuals and Documentation 145
Reporting the Auditors’ Compliance with GAGAS 146
Reporting Deficiencies in Internal Control 147
Reporting on Noncompliance with Provisions of Laws, Regulations, Contracts, & Grant Agreements or Instances of Fraud 147
Presenting Findings in the Report 148
Reporting Findings Directly to Parties outside the Audited Entity 149
Obtaining and Reporting the Views of Responsible Officials 150
Reporting Confidential or Sensitive Information 152
Distributing Reports 153
Review Engagements 154
Compliance with Standards 154
Licensing and Certification 155
Noncompliance with Provisions of Laws, Regulations, Contracts, & Grant Agreements 155
Reporting Auditors’ Compliance with GAGAS 155
Distributing Reports 156
Agreed-Upon Procedures Engagements 157
Compliance with Standards 157
Licensing and Certification 157
Noncompliance with Provisions of Laws, Regulations, Contracts, & Grant Agreements 158
Reporting Auditors’ Compliance with GAGAS 158
Distributing Reports 160
Reviews of Financial Statements 160
Compliance with Standards 160
Licensing and Certification 161
Noncompliance with Provisions of Laws, Regulations, Contracts, & Grant Agreements 161
Reporting Auditors’ Compliance with GAGAS 162
Distributing Reports 163
Chapter 8:
Fieldwork Standards for Performance Audits 164
Planning 164 Auditor Communication 168 Investigations or Legal Proceedings 169
Results of Previous Engagements 170
Assigning Auditors 171
Preparing a Written Audit Plan 171
Conducting the Engagement 172
Nature and Profile of the Program and User Needs 172
Page vi GAO-21-368G
Government Auditing Standards Determining Significance and Obtaining an Understanding of Internal Control 175
Assessing Internal Control 179
Internal Control Deficiencies Considerations 180
Information Systems Controls Considerations 182
Provisions of Laws, Regulations, Contracts, and Grant Agreements 185
Fraud 186
Identifying Sources of Evidence and the Amount and Type of Evidence Required 188
Using the Work of Others 188 Supervision 190
Evidence 190
Overall Assessment of Evidence 196
Findings 198
Audit Documentation 201
Availability of Individuals and Documentation 203
Chapter 9:
Reporting Standards for Performance Audits 206
Reporting Auditors’ Compliance with GAGAS 206
Report Format 207 Report Content 208
Reporting Findings, Conclusions, and Recommendations 212
Reporting on Internal Control 214
Reporting on Noncompliance with Provisions of Laws, Regulations, Contracts, and Grant Agreements 215
Reporting on Instances of Fraud 216
Reporting Findings Directly to Parties outside the Audited Entity 217
Obtaining the Views of Responsible Officials 219
Report Distribution 220 Reporting Confidential or Sensitive Information 221
Discovery of Insufficient Evidence after Report Release 223
Glossary 224 Acknowledgments 235
Comptroller General’s Advisory Council on Government Auditing Standards (2016-2020) 235 GAO Project Team 236
Staff Acknowledgments 236
These standards are for use by auditors of government entities and entities that receive government awards and audit organizations performing GAGAS audits and attestation engagements.
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- Standards
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