Sneak Preview: GAO Aims To Issue Updated Yellow Book by End of 2023

(The following was excerpted from a Thompson Grants Compliance Expert article.) The Government Accountability Office (GAO) intends to issue an updated version of the Government Auditing Standards (GAGAS), also known as the “Yellow Book,” by the end of this year after assessing public comments received in response to a January exposure draft containing proposed revisions to two sections of the document, as well as evaluating suggestions made during a recent Advisory Council on Government Auditing Standards meeting.

GAO accepted comments through April 28 to the January exposure draft that sought to make amendments only to chapter 5, which would be retitled “Quality Management and Peer Review,” and chapter 6, “Standards for Financial Audits” (see “GAGAS Exposure Draft Promotes System of Quality Management,” March 2023). The revisions became necessary after the American Institute of Certified Public Accountants’ (AICPA) Auditing Standards Board (ASB) and the International Auditing and Assurance Standards Board (IAASB) updated their respective quality management standards in June 2022.

After receiving 43 comments on the exposure draft, GAO staff put together another revised draft version for advisory council review that reflected concerns expressed by commenters. The advisory council, which reviews GAGAS and makes recommendations on necessary changes, met Sept. 14 to assess GAO’s newest proposed updates. The draft version made available to the council will not be provided to the general public; the next version to be made available to the public will be the final version.

The January exposure draft notes that auditors conducting a GAGAS engagement that currently complies with ASB or IAASB quality management standards may continue to follow these standards, along with certain provisions of GAGAS (chapter 5.07). This would apply to audit organizations conducting audits and attestation engagements on government entities.

While most commenters considered this proposed change appropriate, some respondents also wanted to add, as an allowed standard to follow, the Public Company Accounting Oversight Board (PCAOB), so GAO in its draft for council review proposed adding PCAOB as a recognized organization along with ASB and IAASB. GAO also clarified in its update that if an entity is a government audit organization, it should meet the GAGAS quality standards; if it’s not such an organization, yet performs GAGAS engagements that are subject to the quality management standards by one of the audit organizations, it should still meet the GAGAS quality standards.

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