The 2018 Yellow Book: What You Need to Know

9/24/2018

The 2018 Yellow Book:

What You Need to Know

September 25, 2018

Governmental Audit

Quality Center

Today’s speakers.

Kim McCormick

CPA

Grant Thornton

Brian Schebler

CPA

RSM

9/24/2018

What We Will Cover

Key changes that will result from the 2018

revision to Government Auditing Standards (also

referred to as GAGAS or the Yellow Book)

Effective date considerations

Other 2018 Yellow Book emphasis areas

Stay tuned for more on YB independence

GAQC will hold a Web event on February 21, 2019,

1:00 pm - 3:00 pm (Eastern Time), titled, Understanding

the 2018 Yellow Book Independence Rules

• Today’s session will be more of a broad overview

• Submit your questions for our consideration for this

future event (either today or to [email protected])

Will include a deep dive into this area

Watch for future GAQC Alert with registration information

9/24/2018

Terminology and abbreviations

CPE Continuing Professional Education HUD

U.S. Department of Housing and

Urban Development

ED Exposure Draft IT Information Technology

F/S Financial Statements OMB Office of Management and Budget

GAAS Generally Accepted Auditing Standards PR Peer Review

GAGAS

Generally Accepted Government Auditing

Standards or Yellow Book

SKE Skill, Knowledge, or Experience

GAO Government Accountability Office SSARS

Statements on Standards for

Accounting and Review Services

GAS-SA

Guide

AICPA Audit Guide, Governmental Auditing

Standards and Single Audits

TCWG Those Charged With Governance

GASB Government Accounting Standards Board UG Uniform Guidance

YB Yellow Book

Key changes made in

the 2018 Yellow Book

9/24/2018

Yellow Book revision process

ED was issued for public comment in April 2017

GAO received over 1,700 individual comments

Final standards issued in July 2018

Consultation with Advisory Council on

Government Auditing Standards both at ED

stage and in developing final standards

Accessing the 2018 Yellow Book

The 2018 Yellow Book can be accessed on the GAO

Yellow Book Web page; or you can access the PDF file

directly

Paper editions are expected to be available for sale via

the Government Publishing Office in Fall 2018

• Printed version will be a larger size book than usual

The GAO Yellow Book Web page also includes:

• Podcast on the 2018 Yellow Book

• 2011 version of the Yellow Book

• GAO contact information

9/24/2018

Effective date

For financial

audits,

attestation

engagements,

and reviews of

financial

statements for

periods ending

on or after

June 30, 2020

For

performance

audits

beginning on or

after July 1,

2019

2018 YB

supersedes:

• 2011 YB

• 2005 GAO

CPE

guidance

• 2014 GAO

peer review

ratings

guidance

Early

implementation

is not

permitted!

Summary of key change areas from 2011 YB

New format and organization

Independence requirements related to nonaudit services

CPE

Peer review requirements

Finding guidance

Waste and abuse

Standards for reviews of financial statements

Performance audits

Other

9/24/2018

New format and organization

Presented in a “clarified” format

• Requirements appear in boxes

• Application guidance included after each boxed requirement

Chapters are reorganized and realigned

• Certain topic areas that had previously been combined are now

separated out resulting in 9 chapters

Supplemental guidance in Appendices from the 2011 YB is

either removed or incorporated into 2018 YB

Example of “clarified” format

9/24/2018

Auditor responsibility under the Yellow Book

Unconditional requirements – auditor “must”

comply with where relevant; identified with use of

“must”

Presumptively mandatory requirements – auditor

must comply with except in rare circumstances;

identified with use of “should”

• If depart from, should perform alternative

procedures and document justification

Application guidance – provides further explanation

of the requirements and guidance for applying them;

identified with “may,” “might,” and “could.”

Independence Changes

Most significant changes relate to performance of

nonaudit services that include preparing accounting

records and financial statements

2018 YB retains much of its other independence

requirements and guidance

9/24/2018

Independence threats related to preparing

accounting records and F/S

2018 YB indicates that nonaudit services in this

area fall into three categories:

Those that automatically

impair independence

Those that are significant

threats

Those that are threats

Activities that impair independence -

preparing accounting records and F/S

• Determining or changing journal entries,

account codes or classifications for

transactions, or other accounting records for

the entity without obtaining management’s

approval;

• Authorizing or approving the entity’s

transactions; and

• Preparing or making changes to source

documents without management approval

See Yellow

Book

paragraph

3.87

9/24/2018

Activities that are significant threats -

preparing accounting records and F/S

Auditors should conclude that preparing F/S in

their entirety from a client-provided trial balance

or underlying accounting records creates

significant threats

See Yellow

Book

paragraph

3.88

Activities that are threats - preparing accounting

records and F/S

Any other services related to preparing accounting

records and F/S create a threat whose evaluation for

significance must be documented

• Recording transactions for which management has determined or

approved the appropriate account classification, or posting coded

transactions to an audited entity’s general ledger;

• Preparing certain line items or sections of the F/S based on

information in the trial balance

• Posting entries that an audited entity’s management has approved

to the entity’s trial balance; and

• Preparing account reconciliations that identify reconciling items for

the audited entity management’s evaluation

See Yellow

Book

paragraph

3.89

9/24/2018

Factors in evaluating significance of threats - preparing

accounting records and F/S

Extent outcome

could have

material effect

on F/S

Degree of

subjectivity in

determining

amounts or

treatment

Extent of entity’s

involvement in

determining

significant

matters of

judgment

DON’T FORGET! Under the 2018 YB, you are required to document

your evaluation of the significance of a threat created by preparing

accounting records and F/S.

New application guidance on clerical

assistance

Providing clerical assistance, such as typing,

formatting, printing, and binding F/S, is unlikely

to be a significant threat.

See

Yellow

Book

paragraph

3.95

9/24/2018

Is the nonaudit service

preparing the F/S (in their

entirety) from a client

provided trial balance or

underlying accounting

records?

Evaluate threat for significance

Is the threat significant?

Document

evaluation and

proceed

Identify and apply safeguards

Assess effectiveness of

safeguards(s)

Is threat eliminated or reduced

to an acceptable level?

Independence impairment – Do

not proceed

Document nature of threat and

any safeguards applied

Proceed

Yes

2018 YB Figure 2 - Revised evaluation of

nonaudit services related to preparing

accounting records and F/S

NEW

New SKE application guidance – YB paragraph 3.79

Management not required to possess expertise needed to perform or

re-perform the services.

Indicators of management’s ability to effectively oversee the nonaudit

service include management’s ability to:

• determine the reasonableness of the results of the nonaudit service

provided

• recognize a material error, omission, or misstatement in the results of

the nonaudit services provided.

YB REQUIREMENT (YB 3.73): Auditors should determine that the audited

entity has designated an individual who possesses suitable SKE and that

understands the services to be provided sufficiently to oversee them.

9/24/2018

CAUTION! Consider Independence Period!

Per YB paragraph

3.20, auditors and

audit organizations

should be

independent from

an audited entity

during:

- Any period of

time that falls

within the period

covered by the

F/S or subject

matter of the

engagement and

- The period of the

professional

engagement

July 1, 2019 June 30, 2020

Assisting client in preparing

the footnotes related to new

accounting standards for

June 30, 2019, financial

statements

Panel discussion – Your thoughts on how the

independence changes will impact your practice and best

practice tips for getting ready

9/24/2018

Independence guidance for government audit organizations

Recognizes that audit organizations in government entities

frequently provide services that differ from the traditional

professional services a firm provides

These types of services are often provided:

• in response to a statutory requirement

• at the discretion of the authority of the audit organization, or

• to an engaging party (such as a legislative oversight body or an independent

external organization)

Generally do not create a threat to independence.

Independence guidance for government

audit organizations

Examples of types of services that generally would not create a

threat to independence:

• Providing assistance and technical expertise to legislative

bodies

• Providing assistance in reviewing budget submissions

• Providing audit, investigative, and oversight-related

services that do not involve a GAGAS engagement, such

• Investigations of alleged fraud

• Periodic audit recommendation follow-up engagements and

reports

See Yellow

Book

paragraph

3.72 for the

full list of

examples

9/24/2018

CPE requirements

2018 YB does not include a 4-hour GAGAS qualification CPE

requirement that had been proposed in the ED

• Instead, added application guidance related to obtaining GAGAS-

specific CPE each time a new Yellow Book revision is issued

• Incorporated relevant sections of previous separate CPE guidance

document and tweaked a few other sections

NEW APPLICATION GUIDANCE: Obtaining CPE specifically on

GAGAS, particularly during years in which there are revisions to the

standards, may assist auditors in maintaining the competence

necessary to conduct GAGAS engagements. (YB 4.19)

CPE guidance addition

Relevant guidance from the 2005, Guidance on

GAGAS Requirements for Continuing

Professional Education, has been incorporated

into the 2018 YB

Guidance incorporated includes topics such as:

• Subject matter of CPE

• Programs and activities that qualify for CPE

• Measurement of CPE

9/24/2018

Other competency and CPE “tweaks”

More emphasis that audit organization have responsibility

for:

• assigning competent auditors

• ensuring collective competence of auditors conducting

the engagement before beginning work on the

engagement

• having processes so that workforce has essential

knowledge, skills and abilities

• maintaining documentation of each auditor’s CPE

New exception to the YB CPE hour requirement for non-

supervisory auditors charging less than 40 hours annually

to YB audits (YB paragraph 4.26)

Qualifications and Competency of

Specialists

YB Paragraph 4.12: The engagement team should

determine that specialists assisting the engagement

team on a GAGAS engagement are qualified and

competent in their areas of specialization.

To understand this requirement for specialists you

need to understand the definitions of the following:

• Auditor

• Engagement Team

• Specialist

See Yellow

Book

paragraphs

4.13 – 4.15 for

application

guidance

related to

“should” in

paragraph

4.12

9/24/2018

YB Auditor Definitions

Auditor: An individual assigned to planning, directing,

performing engagement procedures or reporting on GAGAS

engagements (including work on audits, attestation

engagements, and reviews of financial statements) regardless

of job title. Therefore, individuals who may have the title

auditor, information technology auditor, analyst, practitioner,

evaluator, inspector, or other similar titles are considered

auditors under GAGAS. (YB paragraph 1.27(f))

YB Engagement Team and Specialist Definitions

Engagement team (or audit team): Auditors assigned to

planning, directing, performing engagement procedures or

reporting on GAGAS engagements. (YB paragraph 1.27(i))

Specialist: An individual or organization possessing special

skill or knowledge in a particular field other than accounting or

auditing that assists auditors in conducting engagements. A

specialist may be either an internal specialist or an external

specialist. (YB paragraph 1.27(p))

9/24/2018

Other specialist definitional application guidance

Some engagements may necessitate the use of

specialized techniques or methods that call for the skills

of specialists. Specialists do not include individuals with

special skill or knowledge related to specialized areas

within the field of accounting or auditing, such as income

taxation and information technology. Such individuals are

considered auditors. (YB paragraph 4.13)

Application guidance on applying YB CPE to specialists

External specialists are not auditors subject to the GAGAS CPE

requirements. (YB paragraph 4.30)

Internal specialists assisting on a GAGAS engagement who are not

involved in planning, directing, performing engagement procedures,

or reporting on a GAGAS engagement are not auditors subject to the

GAGAS CPE requirements. (YB paragraph 4.30)

9/24/2018

Application guidance on applying YB CPE to specialists

Internal specialists who are performing work in accordance with GAGAS as

part of the engagement team—including planning, directing, performing

engagement procedures, or reporting on a GAGAS engagement—are

considered auditors and are subject to the GAGAS CPE requirements. (YB

paragraph 4.31)

Because internal specialists apply specialized knowledge in government

engagements, CPE in their areas of specialization qualifies under the

requirement for 24 hours of CPE that directly relates to government auditing,

the government environment, or the specific or unique environment in which

the audited entity operates. (YB paragraph 4.31)

Peer review requirements

2018 YB differentiates requirements for those audit

organizations affiliated with a recognized organization

Audit organization

affiliated with a

recognized

organization?

YES

AICPA and the National State Auditors Association are included on

recognized organization list

9/24/2018

Peer review requirements

Audit organizations affiliated with

a recognized PR organization

Audit organizations NOT affiliated

with a recognized PR organization

• Comply with the respective

organization’s PR requirements

• Additional GAGAS peer review

requirements in areas such as:

• Selection of GAGAS

engagements,

• Peer review report ratings,

and

• Availability of peer review

report to the public

• Comply with GAGAS PR requirements

in such areas as:

• Selection of GAGAS

engagements

• Peer review report ratings

• Availability of the peer review

report to the public

• Written agreement for peer

review

• Peer review team

• Report content

• Audit organization’s response to

the peer review report

Findings – new requirement and application

guidance for developing “cause” element

New Requirement: Auditors should consider internal

control deficiencies in their evaluation of identified

findings when developing the cause element (YB

paragraphs 6.18 and 7.20)

New Application Guidance: Considering internal

control in the context of a comprehensive internal control

framework, such as Standards for Internal Control in the

Federal Government or Internal Control—Integrated

Framework, can help auditors to determine whether

underlying internal control deficiencies exist as the root

cause of findings. Identifying these deficiencies can help

provide the basis for developing meaningful

recommendations for corrective actions. (YB paragraphs

6.30 and 7.32)

Relates to

financial

audits,

attestation

engagements,

and reviews

9/24/2018

Waste and abuse

2011 YB includes a “trip across” requirement to report abuse when an auditor

becomes aware of it

2018 YB transitions the discussion of abuse, along with a new concept of

waste, to application guidance related to findings

New Application Guidance:

• Evaluating internal control in a government environment may also

include considering internal control deficiencies that result in waste or

abuse.

• Because the determination of waste and abuse is subjective, auditors

are not required to perform specific procedures to detect waste or abuse

in financial audits.

• However, auditors may consider whether and how to communicate such

matters if they become aware of them.

• Auditors may also discover that waste or abuse are indicative of fraud or

noncompliance with provisions of laws, regulations, contracts, and grant

agreements.

See Yellow

Book

paragraphs

6.20 – 6.24

Waste definition and examples

Waste is the act of using or expending resources carelessly,

extravagantly, or to no purpose. Importantly, waste can include

activities that do not include abuse and does not necessarily

involve a violation of law. Rather, waste relates primarily to

mismanagement, inappropriate actions, and inadequate

oversight.

The following are examples of waste, depending on the facts

and circumstances:

• Making travel choices that are contrary to existing travel

policies or are unnecessarily extravagant or expensive.

• Making procurement or vendor selections that are contrary

to existing policies or are unnecessarily extravagant or

expensive.

Abuse

definition and

examples in

2018 YB

consistent with

the 2011 YB

9/24/2018

Standards for Reviews of Financial Statements

2018 YB adds requirements and guidance for reviews of

financial statements in accordance with GAGAS

Incorporates by reference SSARS No 21, Section 90, Review

of Financial Statements

Adds additional requirements in following areas:

• Licensing and certification

• Noncompliance

• Reporting compliance with GAGAS

• Distribution of reports

Performance audits: management assertion

clarification

2018 YB now has an explicit statement that

assertions are not required for performance audits

See Yellow

Book

paragraph

8.14

“In performance audits conducted in accordance with

GAGAS, auditors are the party who measures or evaluates

the subject matter of the engagement and who presents the

resulting information as part of, or accompanying, the audit

report. Therefore, GAGAS does not require auditors to obtain

management assertions with respect to the subject

matter when conducting a performance audit.”

9/24/2018

Performance audits: new internal control requirement

Auditors should document the significance of internal control

to performance audit objectives

Internal control

significant to

audit

objectives?

YES

Document

and

proceed

Reassess, as applicable, for new or refined objectives

If internal control significant to performance audit

objectives:

Obtain an understanding of internal control that is significant to the audit

objectives

• Assess and document the assessment of internal control to the extent

necessary to address the audit objectives

• Evaluate and document the significance of identified internal control

deficiencies within the context of the audit objectives

• Consider internal control deficiencies when developing the cause

element of findings

• Identify in the audit report which internal control components and

principles are significant

9/24/2018

Other changes of note - minor wording

changes throughout

The term “audit” was replaced with

“engagement”

The term “performance” was replaced with

“conducting”

Other minor wording tweaks; for example:

• The 2011 YB paragraph 3.65 said “. . . considering

any threats to independence,”

• The 2018 YB paragraph 3.114 revised that section

to “. . . identifying and evaluating any threats to

independence,”

#AICPAgov

Glossary added

at end of 2018

Yellow Book

Other changes of note

9/24/2018

Other changes of note – reporting

application guidance

Disclaimer of opinion – auditors may revise the

statement that the auditor was engaged to audit the

F/S

Auditors should make the report on internal control

and compliance available to users in the same

manner as the financial audit report (if separate

reports are used)

YB report relates only to the most recent reporting

period included, when comparative F/S are present

See Yellow

Book

paragraphs

6.38, 6.43

and 6.47

Other 2018 Yellow Book

emphasis areas

9/24/2018

Falsehoods heard in the hallways. . .

“You do Yellow Book audits, right? I bet

auditing the implementation of that GASB

pension standard was hard!”

“All I know is the client is a government –

so that means we have to follow the Yellow

Book.”

Emphasis Area: When does the Yellow

Book apply?

When required (for example, by law, regulation,

contract, grant agreement, and policy)

• Usually participation in federal programs

(such as grants or loan programs) over a

certain dollar threshold triggers a Yellow Book

requirement (and related compliance audit)

When not required, auditees may voluntarily

engage auditors to apply the YB on the

engagement

See 2018 YB

paragraphs

1.08 – 1.11

9/24/2018

When does the Yellow Book apply?

Audit requirement GAGAS

applicable?

Single audit YES

HUD Consolidated Audit Guide YES

U.S. Dept. of Education Proprietary Schools Audit Guide YES

F/S audit of GASB reporting entity Maybe

Agreed-upon procedures engagement on grant

compliance

Maybe

It’s a piece

of cake

(layer

cake)

GAAS requirements

Yellow Book requirements

And sometimes a compliance audit

standard

9/24/2018

Emphasis area: What do Government Auditing

Standards require above AICPA (GAAS) requirements?

AICPA GAAS

GAO GAGAS

Additional YB requirements for financial statement audits

Ethical principles, independence, and professional judgment

Competency and CPE

Tests of compliance and other matters

Reporting and findings

9/24/2018

Ethical principles, independence and

professional judgment (chapter 3)

Requirements in chapter 3 are intended to be

followed in conjunction with all other applicable

GAGAS requirements

Ethical principles provide the foundation, discipline,

and structure, as well as the environment, that

influence the application of GAGAS

Requirements and application guidance provided for

both independence and the auditor’s use of

professional judgment

Auditors also

need to

comply with

AICPA

requirements

in these areas

when the

audit is also

done under

GAAS

Yellow Book independence

YB uses a conceptual framework approach

GAO provides a list of specifically prohibited

nonaudit services; it does not provide a list of

permitted nonaudit services or relationships

CAUTION! All independence

considerations, and documentation thereof,

need to run through the YB independence

conceptual framework!

9/24/2018

Independence: Differences between AICPA and GAGAS

WHEN the conceptual frameworks are applied

• GAO’s will be used more often than AICPA’s

Documentation of the assessment of management’s SKE

Comparison of AICPA to 2011 YB Independence rules

available on AICPA web site

• AICPA currently working on an update to this comparison

for the 2018 YB; GAQC will communicate when complete

Falsehoods heard in the hallways….

"I'm on the financial statement audit team

for my client and not the compliance audit

team doing the single audit. Luckily, I don't

have to worry about all of that Yellow Book

CPE stuff …."

9/24/2018

Yellow Book competence and CPE

Competence is derived from education and experience

Assigned staff must collectively possess the competence

needed to address engagement objectives, perform work in

accordance with GAGAS and for their assigned roles

Indicators of competence:

• Technical knowledge and skills in areas such as GAGAS, standards,

regulations, techniques, tools, and guidance

• Competence for assigned roles (e.g., supervisory auditor, partner) –

this is new in 2018 YB

Yellow Book competence and CPE

Auditors who plan, direct, perform, or report on a YB

engagement should maintain competence by completing at

least 80 hours of CPE in every 2-year period as follows:

• 24 hours of CPE in subject matter directly related to:

• the government environment,

• government auditing, or

• the specific or unique environment in which the audited entity

operates

• 56 hours of CPE in subject matter that directly enhance the

auditor's professional expertise to conduct engagements

9/24/2018

Yellow Book CPE Exceptions (2018 YB)

Auditors may be exempted from the 56-hour CPE

requirement by the audit organization, but not the 24-

hour requirement, if they:

• charge less than 20 percent of their time annually to

YB engagements, and

• are only involved in performing engagement

procedures, but not involved in planning, directing,

or reporting on the engagement

Nonsupervisory auditors who charge less than 40

hours of their time annually to YB engagements may

be exempted by the organization from all YB CPE

requirements (new in 2018 YB)

Other challenging CPE areas

Determining measurement period

Prorating CPE hours for auditors hired or

assigned to a YB engagement after beginning of

2-year CPE period

Maintaining documentation of CPE hours

completed by each auditor

9/24/2018

Falsehoods heard in the hallways…

"I'm doing a Yellow Book financial statement

audit. Luckily the client doesn’t get any federal

funds so is not subject to a single audit. Whew!

I’m just so glad I don’t have to worry about

compliance on this audit because I just don’t

have the budget for it!”

Yellow Book tests of compliance and other matters

AICPA GAAS

• Test provisions of laws and regulations have a direct and material effect on the

financial statements and disclosures

• Test provisions of laws and regulations that do not have a direct and material effect

but compliance with which may be fundamental to operating aspects of the entity,

the entity’s ability to continue operating, or for the entity to avoid material penalties

GAGAS incremental requirements

• States that auditors should extend the AICPA requirements concerning

consideration of noncompliance with laws and regulations to include consideration

of noncompliance with provisions of contracts and grant agreements

• Under 2011 YB only: consideration of abuse (when we become aware)

9/24/2018

Yellow Book findings to report

Source: Table 4-1, AICPA Audit Guide, GAS and Uniform

Guidance Audits

Report in

Yellow Book

Report

Comm. in

Writing

Use

Judgment

Deficiencies in internal control over financial reporting:

Significant deficiencies and material weaknesses X

Other deficiencies in IC that are not SDs or MWs X

Fraud and noncompliance with provisions of laws or regulations:

Has a material effect on the FS and any other instances that warrant

the attention of TCWG

Does not warrant the attention of TCWG X

Noncompliance with provisions of contracts and grant agreements:

Has a material effect on the FS or other financial data significant to

the audit objectives

Has an effect on the FS that is less than material but warrants the

attention of TCWG

Does not warrant the attention of TCWG X

Yellow Book – format of findings

Elements of an audit finding (2018 YB paragraphs 6.25 – 6.28)

– Criteria–What should we have seen?

– Condition–What did we see?

– Cause–Why did we see what we saw?

– Effect or potential effect–What is the result of what we saw?

– Views of responsible officials (2018 YB paragraphs 6.57 -6.60)

– Recommendations–How do we not see it again (2018 YB paragraph 6.52 states that

auditors may include recommendations if they sufficiently develop the elements of a

finding)

– Context/perspective–Significance or importance of what we saw (2018 YB paragraph

6.51)

– There may be additional elements for reporting findings that are required by other

requirements (e.g., Uniform Guidance)

9/24/2018

Yellow Book findings to report

Auditors need to go the extra mile with GAGAS

• Investigate enough to “tell the story”

• Be able to report the required elements of a finding

• Keep in mind what users will need to know to be able to track

correction and possibly take other action

Emphasis area: Reporting under GAGAS

Auditor’s Report on the Financial Statements

• State our compliance with Government Auditing Standards

• Reference to separate reporting on internal control and compliance

• Special “purpose alert” language

“Yellow Book Report” or “GAGAS Report”

Proper Name:

Report on Internal Control Over

Financial Reporting

and on Compliance

and Other Matters

Based on an Audit

of Financial Statements

Performed in Accordance With

Government Auditing Standards

Relates to the Financial Statements!

Internal Control

over Financial

Reporting

Compliance

which could have a

direct and material

effect on

determination of

financial statement

amounts

9/24/2018

AICPA illustrative Yellow Book reports

AICPA Audit Guide, Government Auditing Standards and Single Audits,

contains numerous illustrations including:

• Auditor’s Report on the Financial Statements (referring to GAGAS)

• Auditor’s Report on Internal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of Financial

Statements Performed in Accordance With Government Auditing

Standards

The GAQC has posted excerpts of these reports on the GAQC Web site

and have left them open

Other YB report illustrations may appear in federal agency audit guides –

use with caution!

Emphasis area – Other incremental considerations

Auditor/client communications

• Engagement letter

• Communications with TCWG

• Written representations from

management

Planning and Performing:

• Previous audits and attestation

engagements

• Materiality – public interest

Audit documentation

• Independence

• Departures from GAGAS

• Supervisory review

Distribution of reports

Make individuals/documentation

available upon request and timely

Peer review report

9/24/2018

Falsehoods heard in the hallways…

“We just finished this audit and issued our GAAS

audit report, just like always. Now the client tells

me they actually were supposed get the audit

done under Government Auditing Standards.

They are practically the same thing - can’t I just

change the terminology in the report?”

Emphasis area – Learning of a YB requirement

late or after the audit is complete

As we just reviewed, the YB has additional

requirements in it such that it would not be

appropriate to simply change the report to add a

GAGAS reference

Facts and circumstances will dictate auditor

actions

Ensure that audit organization quality control

resources are involved in conversations when

this situation occurs

9/24/2018

GAQC and Other

Resources

Where to find the Yellow Book

Available on GAO’s website at www.gao.gov/yellowbook (both

2018 and 2011 versions available)

For technical assistance, contact GAO hotline at:

[email protected]

Or call (202) 512-9535

9/24/2018

Where to find more?

Access GAQC Government Auditing Standards Practice Aids

and Tools

• GAQC Alert #364

• 2011 Yellow Book Independence―Nonaudit Services

Documentation Practice Aid (GAQC is currently

updating for 2018 YB)

• Illustrative Yellow Book reports

• AICPA―2011 Yellow Book Independence Rules

Comparison (an update to this comparison for 2018

currently in process)

AICPA Peer Review resources

Supplemental Checklist for Review of Audit

Engagements Performed in Accordance with

Government Auditing Standards (Yellow Book)

December 2011 Revision

Supplemental Checklist for Review of Agreed Upon

Procedures and Other Attestation Engagements

Performed in Accordance with Government Auditing

Standards (Yellow Book) December 2011 Revision

Peer Review Guidance - Implications of the 2011 Yellow

Book and Performance of Nonaudit Services (beginning

on page 37 of Peer Review Program Supplemental

Guidance – section 3100)

9/24/2018

Panel discussion – What do you think is the most

important takeaway from today’s Web event?

How Do I Get My CPE Certificate?

Access your CPE certificate by clicking the blue

“CPE” icon

• If at the end of this presentation you are eligible for

but unable to print your CPE certificate, please log

back in to this webcast in 24 hours and click the

blue “CPE” button. Your certificate will still be

available.

• If you need assistance with locating your certificate,

please contact the AICPA Service Center at

888.777.7077 or [email protected].

9/24/2018

Thank you