Sneak Preview: FAQ Responds to Questions About 2024 Government Auditing Standards
(The following was excerpted from a recent Federal Grants Compliance Expert article.) Now that the 2024 revisions to the Government Auditing Standards (GAGAS), also referred to as the Yellow Book, have become effective, the Government Accountability Office (GAO) recently issued a Frequently Asked Questions (FAQ) document to help audit organizations better understand the new “system of quality management” requirement under chapter 5 of the Yellow Book.
GAO updated GAGAS in February 2024 to establish a quality management process for responsible auditing that incorporates a “risk-based,” rather than a “policies-based” approach. It amended chapter 5, which it retitled “Quality Management, Engagement Quality Reviews, and Peer Review,” and added application guidance to chapter 6, “Standards for Financial Audits.” The 2024 version became effective for financial audits, for performance audits, attestation engagements and reviews of financial statements for periods beginning on or after Dec. 15, 2025. It also required audit organizations conducting audits and attestation engagements of government entities to design and implement a system of quality management that complies with GAGAS by Dec. 15, 2025, and to complete its evaluation of the system of quality management by Dec. 15, 2026 (see “Revised 2024 GAGAS Implements New Quality Management Process,” March 2024).
A system of quality management for engagements performed in accordance with GAGAS, as stated in chapter 5.02, is to provide the audit organization with reasonable assurance that it and its personnel: (1) fulfill their responsibilities in accordance with professional standards and applicable laws and regulations; and (2) perform and report on engagements in accordance with such standards and requirements. There are eight components to such a system: a risk assessment process; governance and leadership; independence, legal and ethical requirements; acceptance, initiation and continuance of engagements; engagement performance; resources; information and communication; and the monitoring and remediation process.
(The full version of this story has now been made available to all for a limited time here.)
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