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  • GOVERNMENT & AUDITING

Yellow Book revisions update independence guidance

  • Governmental Auditing
  • Audit & Assurance

Auditors performing engagements under generally accepted government auditing standards (GAGAS) are subject to new rules reinforcing the principles of transparency and accountability under revisions published by the U.S. Government Accountability Office (GAO) in July 2018.

The revised standards (also known as the “Yellow Book,” or GAS) were restructured by the GAO to separate the standard’s requirements from the application guidance (see the sidebar “ Restructured Yellow Book ”). Independence standards appear in Paragraphs 3.17–3.108 of the revised Yellow Book.

A clarified standard

Unless specifically prohibited under the Yellow Book (see the sidebar “ Prohibited Bookkeeping Services ”), a firm preparing accounting records and financial statements for an audit client creates threats to independence that either will or may require the firm to apply safeguards to maintain its independence.

While the 2011 rules required firms to consider these possibilities, the 2018 Yellow Book clarifies that preparing the financial statements in their entirety creates a significant threat to independence that should be reduced to an acceptable level by safeguards. A firm should also document the evaluation and how threats were effectively addressed.

For other permissible services involving preparation of accounting records and financial statements, firms should document the evaluation of the threat(s) to determine significance. If significant, the documentation should include a description of the safeguards applied to reduce any significant threat(s) to an acceptable level.

Clarifications appear in the following paragraphs of the new Yellow Book:

Paragraph 3.88 states that when preparing a client’s financial statements in their entirety from the client’s trial balance or underlying accounting records, firms should conclude that significant threats to independence exist. Under the Yellow Book’s conceptual framework approach (Paragraphs 3.26–3.63), when a firm encounters significant threats to independence, the firm should apply safeguards to eliminate or reduce the threats to an acceptable level.

Threats are at an acceptable level when a reasonable and informed third party would conclude that the firm could perform the audit without compromising its professional judgment. A firm that will apply effective safeguards should document the evaluation of threats to independence and describe the safeguards applied. Paragraph 3.69 provides examples of possible safeguards the firm could apply that could be effective for the potential threats that may exist:

  • Separate personnel perform the audit and preparation of accounting records and financial statement services.
  • An independent party (from inside or outside the firm) performs a second review of the preparation of accounting records and financial statement work.

A firm that cannot apply effective safeguards that reduce the threats to an acceptable level should not perform the preparation of accounting records and financial statement services during the period covered by the financial statements (or other subject matter of the engagement) and the period of professional engagement, as independence would be considered impaired.

Paragraph 3.89 states that a firm providing other preparation of accounting records and financial statement services should document its evaluation of threats to independence — even if the firm concludes that the threats are not significant — for the following activities:

  • Recording transactions for which management has determined or approved the appropriate account classification or posting coded transactions to a client’s general ledger;
  • Preparing certain line items or sections of the financial statements based on information in the client’s trial balance;
  • Posting entries that management has approved to the client’s trial balance; and
  • Preparing account reconciliations that identify reconciling items for management’s evaluation.

When threats to independence exist, firms should determine whether they are significant, because significant threats require the firm to apply safeguards to eliminate or reduce the threat(s) to an acceptable level. Auditors may consider the following factors in determining whether threats are significant, including:

  • The extent to which the outcome of the service could have a material effect on the financial statements;
  • The degree of subjectivity involved in determining the appropriate amounts or treatment for those matters reflected in the financial statements; and
  • The extent of management’s involvement in determining significant matters of judgment.

Assume a firm performs services involving preparation of accounting records and/or financial statements that involve straightforward calculations (not subject to significant judgment) where the results of the work would not be material to the financial statements. Management is fully engaged in overseeing the services and has designated an individual with appropriate skills, knowledge, and experience to oversee the service.

If the firm concludes the self-review threat is not significant, it still should document its evaluation, including the rationale for its conclusion. If threats are significant, and safeguards will be applied that effectively reduce threats to an acceptable level, then the documentation should include a description of the safeguards applied. A firm that cannot apply effective safeguards that reduce the threats to an acceptable level should not perform services that involve the preparation of accounting records and financial statements during the period covered by its audit (or other attest services) and the period of engagement, as independence would be considered impaired.

Figure 2 of Chapter 3 provides a visual aid titled “Independence Considerations for Preparing Accounting Records and Financial Statements.” (See the graphic, “ Independence Considerations for Preparing Accounting Records and Financial Statements .”)

Other changes

The Yellow Book provides new application guidance on evaluating whether a client has sufficient skills, knowledge, or experience to oversee a nonaudit service. Paragraph 3.79 provides that an indicator of management’s ability to effectively oversee the service would include the ability to recognize a material error, omission, or misstatement in the results, or the reasonableness of the results, of the nonaudit service. If management lacks this ability, the firm should consider whether it can provide the nonaudit service and remain compliant with the Yellow Book independence standards.

Comparison to the AICPA Code of Professional Conduct

GAS Paragraphs 3.88–3.89 are more restrictive than the AICPA  Code of Professional Conduct (the AICPA Code) nonattest service provisions in ET Section 1.295.020. Except for certain services that are considered to impair independence (ET §1.295.120.03), the AICPA does not conclude that preparation of accounting records and financial statement services create threats or significant threats to independence requiring analysis and documentation. The AICPA Code generally considers the services described in Paragraphs. 3.88–3.89 of the Yellow Book to be permissible without the application of additional safeguards provided the firm complies with ET Section 1.295 (including the general requirements in ET §1.295.040). If preparation of accounting records and financial statement services proposed by a firm are not addressed in the Code, the firm should evaluate threats to independence under the AICPA Conceptual Framework for Independence (ET §1.210.010).

When is the revised Yellow Book effective?

The new Yellow Book is effective for financial audits, attestation engagements, and reviews of financial statements for periods ending on or after June 30, 2020, and for performance audits beginning on or after July 1, 2019. Early implementation is not permitted.

How can firms prepare for these changes?

Firms need to evaluate independence with respect to the provision of nonaudit services during the period covered by the financial statements (or other subject matter of the engagement) and the period of professional engagement, which includes the period covered by the financial statements. Therefore, firms should evaluate whether they will be able to implement safeguards to eliminate or reduce significant threats to an acceptable level under the new standards. In some instances, nonaudit services provided by the auditor to the audited entity prior to June 30, 2020, may affect the auditor’s independence with respect to the subsequent financial audit conducted under the 2018 standards. In such cases, auditors should use professional judgment to comply with the applicable version of the standards.

Here’s an illustration of how a firm may comply with the requirements in the 2018 Yellow Book:

Nov. 1, 2019 – Oct. 15, 2020: Firm is engaged on Nov. 1, 2019, to provide services to the city of Medford (City) consisting of occasional account reconciliations (as requested by the client) that are significant to the financial statements and year-end help preparing the City’s financial statements, including all footnote disclosures (financial statements in their entirety). The firm performs no other nonaudit services for this client.

November 2020: Firm audits the City’s Sept. 30, 2020, fiscal year-end financial statements.

The 2018 Yellow Book applies to services involving preparation of accounting records and financial statements the firm performs after July 1, 2019. Based on the requirements in Paragraph 3.88 of the Yellow Book, prior to accepting the nonaudit services engagement, the firm should conclude that the financial statement preparation services create significant threats to independence and document the threats and safeguards applied to eliminate and reduce the threats to an acceptable level. Per Paragraph 3.89 of the Yellow Book, the firm should then document the firm’s evaluation of threats related to the monthly account reconciliations and, if significant, document the safeguards applied to eliminate or reduce threats to an acceptable level.

The firm considers threats to independence arising from these services in the aggregate and applies the following safeguards:

The firm assigns different personnel from different offices in the firm to the audit and nonaudit engagements. In addition, all audit engagements performed under the Yellow Book are subject to a second independent review by another partner in the firm. Finally, the firm documents management’s review and approval processes over the services provided to the client. The firm believes the combination of these safeguards will adequately reduce any self-review threats to an acceptable level.

What if the firm has only one shareholder and two staff and is unable to assign different personnel to the engagements or provide a second reviewer on the audit or preparation of accounting records and financial statement work? Assume the client is a small charitable organization and the cost to hire an outside CPA to perform an independent review of the services cannot be justified by the engagement fees.

In that case, the firm may need to relinquish or scale back the scope of its nonaudit services if it wishes to continue performing audit services for the client. Or the firm may resign from the audit engagement and perform only the preparation of accounting records and financial statement services. Independence would be impaired if the firm performed both the audit and nonaudit services described above without appropriate safeguards.

Preparing financial statements in their entirety

Paragraph 3.88 of the 2018 Yellow Book provides that “preparing financial statements in their entirety from a client-provided trial balance or underlying accounting records” creates significant threats to independence. Firms should consider whether, in substance, the firm’s financial statement preparation services reach the threshold of “in their entirety.”

Even if the firm concludes that the financial statement preparation services do not meet that threshold, providing preparation of accounting records and financial statement services still requires the firm to evaluate and then document the evaluation of threats to independence under Paragraph 3.89. That is, the firm should evaluate the significance of threats and, when threats are significant, apply safeguards to eliminate or reduce the threat to an acceptable level. The firm should consider the significance of the assistance provided to the subject matter of the audit and consider the following:

  • Whether the services provided are material to the financial statements. For example, if the firm is providing or assisting with a single note disclosure on a new accounting standard that is material to the statements, that will likely create a significant threat.
  • The comprehensiveness of the services provided. For example, if the firm helps with the statement of cash flows and most of the note disclosures, then threats will likely be significant.
  • The cumulative effect of the services provided. For example, if the firm is assisting with cash to accrual or conversion entries in addition to financial statement preparation assistance, threats to independence will be more significant.

Paragraph 3.95 states that providing clerical assistance is unlikely to create a significant threat; however, Paragraph 3.89 requires documentation of the evaluation.

Reminders regarding documentation unchanged from the 2011 Yellow Book

Unchanged from the 2011 Yellow Book, the firm should also document the firm’s:

  • Consideration of management’s ability to effectively oversee the preparation of accounting records and financial statement services (Paragraph 3.107, 2018).
  • Understanding with the client’s management or those charged with governance regarding:

1. The objectives of the nonaudit service;

2. The services to be provided;

3. The client’s acceptance of its responsibilities;

4. The firm’s responsibilities; and

5. Any limitations on the provision of nonaudit services (Paragraph 3.77, 2018).

Impact of the new Yellow Book on firms

Smaller firms that typically audit smaller governmental and other entities subject to GAGAS are bound to be most impacted by clarifications in the 2018 Yellow Book. These firms may be unable to assign separate personnel or other effective safeguards when providing audit and preparation of accounting records.

As illustrated, if threats are significant and effective safeguards cannot be applied, firms may need to choose between the audit and preparation of accounting records and financial statement services. Firms should also factor in additional time pre-engagement to apply the new rules, determine whether they can continue to perform both audit and preparation of accounting records and financial statement services, and, if so, prepare the required documentation for their workpapers.

Way forward

Clarifications to the Yellow Book independence standards make it clearer that firms should apply appropriate safeguards when preparing a client’s financial statements in their entirety. For other permissible services involving preparation of accounting records and financial statements, firms will need to evaluate threats to determine whether they are significant, and, if so, whether safeguards can effectively eliminate or reduce threats to an acceptable level so the firm is independent.

Documentation of the evaluation of these threats and, if applicable, safeguards applied to reduce any significant threats to an acceptable level will also be required whenever the firm is providing permissible services involving preparation of accounting records and financial statements. In some cases, especially in the smaller firm/client markets, a lack of effective safeguards may preclude firms from providing services involving the preparation of accounting records and financial statements to their audit clients. To maintain compliance with GAGAS, firms should proactively consider the impact of the 2018 Yellow Book independence standards on these client engagements.

Restructured Yellow Book

The GAO restructured the Yellow Book to separate the standard’s requirements from the application guidance. Requirements are included in a box that has a header indicating a requirement. Application guidance follows the related requirement boxes.

A glossary was added to the appendix to provide definitions for certain terms used. In addition, firms should look at terms defined in Paragraph 1.27.

Prohibited bookkeeping services

Paragraph 3.87, which is unchanged from the 2011 Yellow Book, outlines the types of bookkeeping services firms may not perform because they are management responsibilities that impair independence, that is:

  • Determine or change journal entries, account codes or classifications for transactions, or other accounting records for the client without obtaining management’s approval;
  • Authorize or approve the client’s transactions; and
  • Prepare or make changes to source documents without management’s approval.

Independence considerations for preparing accounting records and financial statements

Independence considerations for preparing accounting records and financial statements

  • GAO Yellow Book site
  • 2018 Government Auditing Standards

— Catherine R. Allen , CPA, provides ethics and independence consultation and training through her consulting firm, Audit Conduct LLC, in Rocky Point, N.Y. Nancy Miller , CPA, is a managing director in the Independence Group at KPMG U.S. To comment on this article or to suggest an idea for another article, contact Ken Tysiac, the JofA ’s editorial director, at [email protected] .

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The new 2018 yellow book: a summary of what you need to know.

yellow book report

Suwannar Kawila

The U.S. Government Accountability Office (GAO) issued an update to Generally Accepted Government Auditing Standards (GAGAS) ( http://www.gao.gov/yellowbook) . GAGAS, commonly known as the “Yellow Book,” was created to provide a foundation for efficient and high-quality government audits. The requirements apply to some governmental organizations and other organizations that receive grants from the federal government, including higher education institutions and not-for-profit organizations. The revised version has been streamlined and rationalized to simplify the professionals’ process of finding relevant rules when performing research. The redesigned Yellow book also contains clarifying details that CPAs will find helpful and some significant new regulations that auditors undertaking audits under GAS should be aware of. 

Watch our video below or read the article underneath to understand more!

The  2018 Yellow Book goes into effect  for financial audits, attestation engagements, and reviews of financial  statements for periods ending on or after June 30, 2020, and for performance  audits starting on or after July 1, 2019. Auditors should, however, take into  account the independence provisions of the 2018 Yellow Book before the  effective date because, when performing audits for periods before the new rules  are in effect, auditors performing non-audit services for a financial statement  audit will need to comply to the new independence requirements at the start of the  audit period and be independent for the entire period to which the financial  statements relate. Although it is not authorized to adopt the new requirements  early, auditors may want to consider the new  regulations when making decisions  about the impact that non-audit services have on independence.

yellow book report

CPAs familiar with the Yellow Book’s format from 2011 will immediately recognize a significant difference in the 2018 edition. The chapters have been rearranged and realigned, and the 2018 Yellow Book’s chapters now include extra advice from the appendices of the 2011 Yellow Book or omitted if no longer relevant. The biggest and most significant improvement is that requirements are now presented in a box, followed by the proper application instructions.

The terms “must” and “should” are used in the new standards to distinguish between presumptively mandatory requirements and those that are unconditional. While “must” is self-explanatory, caution should be followed if an auditor decides not to perform a procedure described as something that “should” be done. According to the requirements, if an auditor sees the need to vary from a presumptively mandatory requirement, the auditor must document his explanation for the deviation and explain how the alternative audit processes carried out were sufficient to meet the requirement’s intent.

yellow book report

2018 Yellow Book Key Changes ( https://www.cpajournal.com/2019/05/01/the-new-yellow-book/ )

yellow book report

Non-audit Services and Independence

The most significant change to the standards relates to how auditors evaluate the nonaudit services they perform and whether the performance of those services creates significant threats that require safeguards to reduce those threats to an acceptable level. When nonaudit services are performed, an evaluation should be made to determine if the service creates a threat to independence. This evaluation should be documented and follow the existing GAS independence framework, which continues to be a part of the 2018 revised Yellow Book. To summarize the requirements of the independence framew ork, the first step is to identify any threats, including the performance of nonaudit services. The next step is for the auditor to evaluate the significance of the threat and consider the skills, knowledge, and experience of the persons at the entity charged with overseeing the service. If the threat is considered significant, then a safeguard must be implemented.

yellow book report

The new standards also make it clear that preparing financial statements in their entirety from a client-provided trial balance or underlying records is considered a significant threat to the auditors’ independence. While the AICPA’s 2011 Yellow Book Independence—Nonaudit Services Documentation Practice Aid provides several examples to help auditors use their judgment on whether the preparation of financial statements creates a significant threat to independence, the 2018 Yellow Book clearly takes that judgment away from the auditor by stating this type of service automatically creates a significant threat. Because of this, the author recommends that auditors who are still performing audits under the 2011 Yellow Book take into account the rules in the 2018 Yellow Book when determining whether the nonaudit service of preparing substantially all of the financial statements is a significant threat or not.

The standards clarify other nonaudit services frequently performed by auditors that automatically impair independence such that no safeguard could possibly be applied to eliminate this threat. In these cases, auditors must either refuse to perform the nonaudit service or resign from the audit. The following is a list of those services that automatically impair independence:

●       Keeping the original books and records of the entity

●       Changing journal entities, account coding, or classification

●       Authorizing or approving the entity’s transactions

●       Preparing or making changes to source documents without management approval.

Other frequently performed nonaudit services that do not automatically impair independence should be evaluated to determine if they create significant threats. These services include the following:

●       Making cash to accrual conversions

●       Performing reconciliations

●       Preparing Form 990 and other taxes

●       Maintaining depreciation schedules

●       Recording transactions in the entity’s books that management has approved

●       Preparing certain line items on financial statements based on information in the trial balance

●       Posting entries that management has approved to the entity’s trial balance  

Under the new standards, the most important factors in determining whether the nonaudit service should be considered a significant threat to independence are the extent to which the outcome of the service could have a material effect on the financial statements, the degree of subjectivity in determining amounts, and the extent of the audited entity’s involvement in determining significant matters of judgment.

The identification of a significant threat does not prohibit an auditor from performing an audit unless it is one of the prohibited services outlined above. In these circumstances, however, the auditor must implement a safeguard that will eliminate or reduce the treat to an acceptable level. Auditors should use judgment in deciding which safeguard will best eliminate or reduce the threat to an acceptable level. Common safeguards that have been known to be effective include the following:

●       Assigning separate engagement personnel for audit and nonaudit services

●       Obtaining secondary reviews by personnel who were not involved in planning or supervising the engagement

●       Educating management on the nonaudit services performed

●       Requiring such engagements to undergo an engagement quality control review (EQCR)

●       Having an independent organization perform a secondary review of the file or reports

●       Having a partner not involved with planning or supervising the audit engagement review the financial statements before releasing them

●       Educating management so they are in a position to review and approve the financial statements

●       Requesting that the audited entity complete a disclosure checklist as part of its overall review.  

The new standards include one important clarification: providing clerical assistance, such as typing, formatting, printing, and binding financial statements, is unlikely to be a significant threat. The nature of these services should, however, be evaluated and documented.

Required Competence and CPE

The other major impact of the new standards is the clarification on how continuing professional education (CPE) affects the competence auditors should have regarding skills, ability, and knowledge of specific GAS requirements. Those who were following the Yellow Book exposure draft should be aware that the proposed requirement to take four hours of GAS-specific CPE was not included in the finalized 2018 Yellow Book; instead, the standards state that obtaining CPE on specific GAS topics, particularly during years in which there are revisions to the standards, may assist auditors in maintaining the competence necessary to conduct GAS engagements. The standards also state that auditors assigned to an engagement must collectively possess competence for the engagement’s objectives and GAS before beginning work on the engagement.

The rules state that auditors who plan, direct, perform, and report on an engagement in accordance with GAS should develop their competency by completing 80 hours of CPE during every two-year period, with a minimum of 20 hours of CPE in each year of that period. Of those 80 hours, at least 24 hours of subject matter need to be directly related to the government environment, government auditing, or the specific environment in which the audited entity operates; the remaining 56 hours of subject matter should directly enhance professional expertise to conduct engagements. The new standards provide examples of topics that qualify under each of those categories. In addition, the audit organization should maintain documentation of each auditor’s CPE.

There are several exceptions and exemptions to these rules. If an auditor charges less than 20% of her time annually to engagements conducted in accordance with GAS and only performs procedures (i.e., does not plan, direct, or report), she is only required to meet the 24-hour requirement over the two-year period and is exempt from the 56-hour requirement. In addition, nonsupervisory auditors who charge less than 40 hours to GAS auditors are exempted from all CPE requirements.

Waste and Abuse ( https://www.cohencpa.com/knowledge-center/insights/september-2019/4-yellow-book-changes-that-may-change-your-not-for-profit )

The 2018 Yellow Book introduces a new concept referred to as “waste,” defined as “the act of using or expending resources carelessly, extravagantly, or for 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.”

Waste is an expansion of the concept referred to as “abuse” in the 2011 Yellow Book. While auditors are not responsible for designing testing procedures to detect waste or abuse, they should understand that the discovery of either of these items may indicate that fraud or noncompliance could exist.

yellow book report

Review Engagements

The 2018 Yellow Book adds standards for review engagements for the first time. It reflects the issuance of Statement on Standards for Attestation Engagements (SSAE) 18, Attestation Standards: Clarification and Recodification, and Statement on Standards for Accounting and Review Services (SSARS) 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification.

Increased Scrutiny of GAS Audits

The 2018 Yellow Book offers professionals a new format with which to read and understand the rules. As audits under GAS continue to be highly scrutinized and receive increased attention during peer review, CPAs who perform these audits need to be familiar with the detailed rules or risk having problems in peer review or with licensing regulators. This article should provide a good start in guiding CPAs to the essential information they need to know.

How can firms prepare for these changes?

Firms must assess independence in terms of providing non-audit services during the period covered by the financial statements (or another subject of the engagement) as well as the duration of professional engagement, which includes the period covered by the financial statements. As a result, firms should consider whether they can implement safeguards to eliminate or minimize substantial threats to an appropriate level under the new guidelines. In some instances, non-audit services provided by the auditor to the audited entity before June 30, 2020, may have an influence on the auditor’s independence in the subsequent financial audit conducted in accordance with the 2018 standards. In these circumstances, auditors must abide by the relevant version by exercising professional judgment.

Bottom Line

Auditors go to great lengths to record the measures in place to reduce the significant threat to a manageable level to continue offering the nonaudit service of aiding with financial statement preparation. To do your part as an auditee, it is your responsibility to identify the best and most appropriate individual within your organization with the skills, knowledge, and experience to review the financial statements and allocate the proper amount of time once the auditor has supplied the draft copies. Utilize the auditors’ financial statement checklist and the conversion journal entries to thoroughly examine the financial statements to ensure no significant misstatements. Lastly, arrange a time for you and your auditor to review the financial statement draft so that you can provide all of your concerns are addressed before you submit your report.

How can we help

We’re here to assist you as you prepare for your audit to satisfy requirements and so you can experience high-quality audit services.  HWA Alliance of CPA Firms Inc.  is a leader in providing guidance and detailed attention in the preparation of audits. Our experts can assist you in following the updated Yellow book standards and compliance requirements, building internal controls, and acquiring the essential information to make your audit proceed smoothly. Our professionals have worked with NPOs, higher education institutions, and State and Local Government as grant applicants and recipients and has delivered audits of a wide range of complexity . We ensure accurate financial reporting and compliance. Your audit will be conducted thoroughly and on schedule, and our experts will share insights with you throughout the process so that you understand the details and expectations of your audit.

Don’t hesitate to reach out—experience audit success with us.

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Government and Nonprofit Compliance with Yellow Book Requirements

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Is your government or nonprofit subject to the Yellow Book requirements? If yes, and your audits are not performed accordingly, you might suffer the loss of grants or be in violation of state law. This is true even if you are not aware of the requirements.

What is the Yellow Book?

The Yellow Book is issued by the U.S. Government Accountability Office (GAO) and has requirements in addition to those required by the American Institute of CPAs (AICPA). Other names for the Yellow Book are generally accepted governmental auditing standards (GAGAS) and Government Auditing Standards (GAS).

Most audits performed in the United States are done in accordance with the AICPA audit standards (known as generally accepted auditing standards). Additionally, the Yellow Book requirements apply to many governments and nonprofits. Think of the Yellow Book requirements as a layer of audit standards that sits on top of the AICPA requirements.

When your entity is audited in accordance with the AICPA and the GAO audit standards, your audit package will contain two reports:

  • An opinion regarding the fairness of the financial statements in accordance with generally accepted auditing standards
  • A Yellow Book report that provides information about internal control findings and noncompliance with laws and regulations, if any

Yellow Book Applicability

So how do you know if the Yellow Book standards apply to your organization?

First, if you are a local government in Georgia, you must comply with Yellow Book requirements. Georgia Code section 36-60-8 states:

Whenever an audit of the financial affairs of a county or municipal corporation or of an officer, board, department, unit, or other political subdivision of a county or municipal corporation is made pursuant to a requirement…such audits shall be conducted in conformity with generally accepted government auditing standards.

City and county audits are annually submitted to the Georgia Department of Audits. Those state auditors review governmental reports to see if the requisite GAGAS report is included and whether the report is properly presented.

Second, if your organization spends more than $750,000 in federal funds, your government or nonprofit is required to have a Single Audit. And if you are subject to Single Audit requirements, then you are also subject to Yellow Book requirements. In recent years, many Electric Membership Corporations (EMCs) have had storm damage requiring clean up. The federal government has provided federal funds to assist with those efforts. As a result, Single Audits have been required. Also, COVID-19 funds might trigger the need for future Single Audits (and Yellow Book audits).

Third, if your government or nonprofits receive grants, you might be subject to the GAGAS requirements. Grant agreements often contain Yellow Book compliance requirements. So, your organization can be subject to the Yellow Book requirements due to grant stipulations.

Fourth, debt agreements can trigger the need for Yellow Book compliance. Many EMCs must comply with the GAGAS standards due to Rural Utility Service (RUS) loan requirements. If your EMC has an outstanding loan due to RUS, then your organization must comply with the Government Auditing Standards .

Fifth, your organization can request that your audit be subject to the GAGAS standards. Your audit engagement letter can include this requirement even when a Yellow Book audit is not required by law, regulation, grant agreement, or debt agreement.

The above list is not comprehensive but highlights some of the more common Yellow Book triggers.

Not Sure About Yellow Book

If you are not sure about whether your entity is subject to the Government Auditing Standards , contact us. We will help you make that assessment.

Also, if you need a Yellow Book audit, we can assist you. Our firm does over one hundred Yellow Book audits annually. With over sixty CPAs, we are here to help.

Governmental illustrative auditor's reports

The following provides a sampling of illustrative auditor’s reports released by the AICPA Governmental Audit Quality Center (GAQC) as a public service. Auditors should exercise professional judgment in any situation not specifically addressed in the illustrative reports provided. Many of the reports have been excerpted from the AICPA Audit Guides further described below. Auditors may access additional report illustrations in those guides which may be purchased at the AICPA store.

Government Auditing Standards report illustrations

These report examples have been excerpted from the AICPA Audit Guide, Government Auditing Standards and Single Audits. In addition to various examples of the reports issued to meet the reporting requirements of Government Auditing Standards for internal control over financial reporting and compliance and other matters, the illustrations provided include a financial statement audit report for a state or local government and a not-for-profit organization where the audit is being performed under both AICPA generally accepted auditing standards and Government Auditing Standards .

Access illustrative Government Auditing Standards reports from the 2023 guide.

Single audit report illustrations

These report examples have been excerpted from the AICPA Audit Guide, Government Auditing Standards and Single Audits , and meet the reporting requirements of the Uniform Guidance for compliance for each major program and internal control over compliance in a single audit, as well as for program-specific audits.

Access illustrative single audit reports from the 2023 guide

Access illustrative program-specific reports from the 2023 guide

CSLFRF alternative examination attestation report illustrations

These illustrative practitioner’s reports, developed by the GAQC are provided for practitioners engaged to perform a compliance attestation engagement for eligible recipients of the Coronavirus State and Local Government Fiscal Recovery Fund. For more information about these engagements, see the GAQC Practice Aid: Compliance Attestation Examination Engagements of Certain Eligible Recipients of the Coronavirus State and Local Fiscal Recovery Funds Program and the GAQC archived Web event, Auditor Considerations: The Coronavirus State and Local Fiscal Recovery Funds Program.

Access CSLFRF compliance attestation engagement illustrative reports.

SVOG examination attestation report illustrations

These illustrative practitioner’s reports, developed by the GAQC, are provided for practitioners engaged to perform a compliance attestation engagement for for-profit recipients of the Shuttered Venue Operators Grant (SVOG). For more information about these engagements, see Shuttered Venue Operators Grant Audit and Attestation Requirements for For-Profit Recipients guidance issued by the U.S. Small Business Administration, GAQC Alert #445 , the GAQC archived Web event, Auditing For-Profit Recipients of the Shuttered Venue Operators Grant , and the SBA SVOG Web site .

Access SVOG compliance attestation engagement illustrative reports and schedule of findings and responses.

State and local government financial statement audit report illustrations

These illustrative reports have been excerpted from the AICPA Audit and Accounting Guide, State and Local Governments , and provide examples of various reporting scenarios relevant to a state and local government financial statement audit when the audit is being performed under AICPA generally accepted auditing standards.

Access illustrative state and local government financial statement audit reports from the 2023 guide.

HUD report illustrations

The following report illustrations relate to audits performed under the U.S. Department of Housing and Urban Development (HUD) Consolidated Audit Guide (HUD Guide). The reports include a financial statement audit report, a report on internal control over financial reporting and compliance and other matters under Government Auditing Standards , and a report on compliance and internal control over compliance to meet the requirements for audits performed under the HUD Guide.

Access HUD Guide reports updated for the AICPA Statement on Auditing Standards (SAS) Nos. 134-140 (effective for audits of periods ending on or after December 15, 2021).

Access chapter 2 of the HUD Guide (issued in 2013). Note that HUD has not updated the illustrative reports in chapter 2 of the HUD Guide for many years. The report illustrations available above have been updated by the GAQC to reflect the latest standards.

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One of the oldest books in existence will be up for auction

One of the oldest books in existence will be up for auction.

(CNN) – One of the world’s oldest books is expected to garner more than $2.5 million at auction later this year.

The Crosby-Schøyen Codex will go under the hammer at Christie’s Auction House in London on June 11.

The codex consists of 52 leaves, or 104 pages, said to have been written by a single scribe over a period of 40 years at a monastery in northern Egypt.

It is the earliest Christian liturgical book, written on papyrus in the coptic language, which replaced hieroglyphics in Egypt.

It likely dates back to sometime between the middle of the third or fourth centuries.

The codex is part of a larger discovery made in the 1950s comprising Biblical texts, Christian writings, and pagan literary texts.

Copyright 2024 CNN Newsource. All rights reserved.

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yellow book report

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Large invasive hornets found again in South Carolina

GREENVILLE, S.C. (FOX Carolina) - Clemson University agriculture experts are asking South Carolinians to report sightings of large hornets after a yellow-legged hornet queen was captured in Jasper County.

This queen is part of an invasive and predatory hornet species known to attack honeybee colonies.

Ben Powell of the Clemson Cooperative Extension said the hornets have become serious pests of beekeeping operations.

“Establishment of this exotic pest in the U.S. would pose a significant threat to our already embattled beekeeping enterprises,” Powell said.

MORE FROM NEWS 12:

The hornets, native to Southeast Asia, live in egg-shaped, paper nests, often large and above ground.

The yellow-legged hornet should not be confused with the cicada killer wasp, the bald-faced hornet, paper wasps, queen yellowjackets, wood wasps and robber flies. The yellow-legged hornet is bigger than these species.

“The fact that we captured a queen is significant,” said Steven Long, assistant director of the Clemson Department of Plant Industry. “It means that we have prevented a yellow-legged hornet nest from establishing in South Carolina. Georgia has been battling these insects and continues to capture them in the Savannah area, and we will continue to monitor our traps.”

People who believe they have spotted a yellow-legged hornet should visit www.clemson.edu/public/regulatory/plant-industry/invasive/ylh.html .

Copyright 2024 WRDW/WAGT. All rights reserved.

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yellow book report

COMMENTS

  1. Yellow Book: Government Auditing Standards

    Copies of the 2018 Yellow Book can be purchased online through the Government Publishing Office at GPO Bookstore- Government Auditing Standards- 2018 Revision with 2021 Technical Update or by calling 202-512-1800 or 1-866-512-1800. Copies of the 2024 Yellow Book will be available for purchase at a later date through the Government Publishing ...

  2. PDF April 2021 GOVERNMENT AUDITING STANDARDS 2018 Revision

    Government Auditing Standards (known as the Yellow Book). These technical updates to the 2018 revision of Government Auditing ... so that report users understand the scope of the work within the context of the entity's internal control system. 9.32 Auditors may identify the control components, underlying

  3. Illustrative Auditor's Reports

    The AICPA Audit Guide, Government Auditing Standards and Single Audits (GAS-SA Guide), issued annually, presents guidance on the audits of financial statements conducted in accordance with the 2018 edition of Government Auditing Standards (also referred to as the Yellow Book). It also includes recommendations for the conduct of single audits. You can purchase a copy of the most recent edition ...

  4. Government Auditing Standards (Yellow Book) Practice Aids and Tools

    Illustrative Yellow Book Audit Reports Government Auditing Standards, 2018 Revision (also referred to as the Yellow Book) The professional standards and guidance for financial audits contained in Government Auditing Standards provide a framework for conducting high quality audits with competence, integrity, objectivity, and independence.

  5. PDF GAQC Practice Aid: A Primer on Government Auditing Standards

    most recent peer review report publicly available. In addition, an audit organization seeking to enter into a contract to perform a Yellow Book audit should provide the most recent peer review report and any subsequent peer review reports received during the period of the contract to the party contracting for such services. Planning.

  6. PDF GAO's "Yellow Book" 2018 update: Summary of key changes

    Auditing Standards (Yellow Book) as a follow-on to a 2017 exposure draft. These standards help frame both the auditor's expectations on the scope of engagement and the agency's expectations when developing the audit contract or agreement. The updated version of the Yellow Book contains changes in six specific areas:

  7. PDF The 2018 Yellow Book: What You Need to Know

    Relates to financial audits, attestation engagements, and reviews. 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.

  8. Yellow Book revisions update independence guidance

    The revised standards (also known as the "Yellow Book," or GAS) were restructured by the GAO to separate the standard's requirements from the application guidance (see the sidebar "Restructured Yellow Book"). Independence standards appear in Paragraphs 3.17-3.108 of the revised Yellow Book. A clarified standard

  9. The New 2018 Yellow Book: A Summary of What You Need to Know

    The 2018 Yellow Book goes into effect for financial audits, attestation engagements, and reviews of financial statements for periods ending on or after June 30, 2020, and for performance audits starting on or after July 1, 2019. Auditors should, however, take into account the independence provisions of the 2018 Yellow Book before the effective date because, when performing audits for periods ...

  10. GAO updates the "Yellow Book" standards for government auditing

    The U.S. Government Accountability Office (GAO) issued a new revision of Generally Accepted Government Auditing Standards, also known as the "Yellow Book." Last revised in 2011, the Yellow Book is designed to help government auditors at the federal, state, and local levels produce high-quality audits that reflect competence, integrity ...

  11. YELLOW BOOK GOVERNMENT AUDITING STANDARDS

    Solutions. EO-YB GS-0417-0B. Course Code: 736127. The AICPA offers a free, daily, e- e-mailed newsletter covering the day's top business. and financial articles as well as video content, research and analysis concerning CPAs and those who work with the accounting profession.

  12. Government and Nonprofit Compliance with Yellow Book Requirements

    A Yellow Book report that provides information about internal control findings and noncompliance with laws and regulations, if any; Yellow Book Applicability. So how do you know if the Yellow Book standards apply to your organization? First, if you are a local government in Georgia, you must comply with Yellow Book requirements.

  13. PDF Illustrative Auditor's Reports Under Government Auditing ...

    Government Auditing Standards requires that in addition to providing an opinion or a disclaimer of opinion on the financial statements,2 auditors should report on the scope and results of testing of the auditee's internal control over financial reporting and compliance with laws, regulations, and provisions of contracts or grant agreements.

  14. The Yellow Book CPE Requirements

    To maintain compliance with Yellow Book CPE requirements, auditors are required to complete 80 hours of CPE every two years. Of those 80 hours, a minimum of 20 hours should be completed in each year (meaning auditors shouldn't try to get all 80 hours in the same year). Also, 24 hours of the 80 hours should be designated as "government CPE."

  15. Government Auditing Standards: 2018 Revision Technical Update April

    The Yellow Book provides standards and guidance for auditors and audit organizations, outlining the requirements for audit reports, professional qualifications for auditors, and audit organization quality control. Auditors of federal, state, and local government programs use these standards to perform their audits and produce their reports.

  16. Guides and Reports

    Peer Review Resources. 2018 Yellow Book Peer Review Guide - A tool to conduct a self-assessment for compliance with Generally Accepted Government Auditing Standards. 2017 Red Book Peer Review Guide - A tool to conduct a self-assessment for compliance with the International Professional Practices Framework. Other Peer Review resources.

  17. Governmental illustrative auditor's reports

    AICPA & CIMA Governmental and Not-for-Profit Training Program. Onsite, Live Online, Live Online Select 8. Level: Intermediate. $905 - $1,895. CPE Credits: 12 - 22. Professional Insights. How Emerging Technologies are Enhancing the Accounting Profession. Mar 11, 2024.

  18. PDF Note: The 2018 Yellow Book became effective for June 30, 2020 ...

    Red lined version of Example 4-3. Note: The 2018 Yellow Book became effective for June 30, 2020, year-end financial audits and resulted in slight revisions to the chapter 4 GAS-SA Guide illustrations. As a member service, we are providing below a red-lined version of Example 4-3 to more easily identify what has changed.

  19. Updating Government Auditing Standards—The 2024 Yellow Book

    The Yellow Book is the book of standards and guidance for government auditing—outlining the requirements that make for effective, quality audits when reviewing government programs and spending. ... For example, during an audit, auditors may encounter pressures and incentives to change procedures or reports for personal gain. In resolving ...

  20. One of the oldest books in existence will be up for auction

    (CNN) - One of the world's oldest books is expected to garner more than $2.5 million at auction later this year. The Crosby-Schøyen Codex will go under the hammer at Christie's Auction House in London on June 11.. The codex consists of 52 leaves, or 104 pages, said to have been written by a single scribe over a period of 40 years at a monastery in northern Egypt.

  21. PDF GAO-21-368G, Government Auditing Standards: 2018 Revision Technical

    (known as the Yellow Book). These technical updates to the 2018 revision of Government Auditing Standards are effective upon issuance. 2018 Revision of ... the extent necessary for report users to reasonably interpret the findings, conclusions, and recommendations in the audit report. 9.32.

  22. Large invasive hornets found again in South Carolina

    GREENVILLE, S.C. (FOX Carolina) - Clemson University agriculture experts are asking South Carolinians to report sightings of large hornets after a yellow-legged hornet queen was captured in Jasper ...

  23. PDF Auditee Resource Center Article

    the report to question who prepared the information. ... Government Auditing Standards (Yellow Book) as well as findings related to federal awards. In at least one package we reviewed, the auditor only reported Yellow Book findings but there was no CAP presented by the auditee.