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Government Auditing Standards

statement of changes in net position, (4) statement of tence, integrity, … objectivity, and independence
budgetary resources, (5) statement of financing, and (6) in planning, conducting, and reporting on their
statement of custodial activity. work. (Yellow Book, p. 1)
SEE ALSO Government Auditing Standards; Government
Financial Reporting; Governmental Accounting Stan- RELATIONSHIP BETWEEN GAGAS
dards Board; Not-for-Profit Accounting AND OTHER PROFESSIONAL
STANDARDS
The Yellow Book recognizes the value of other professional
BIBLIOGRAPHY
Federal Financial Management Improvement Act (1996). Public standards. Incorporated in this volume are the fieldwork
Law 104-208. and reporting standards and related statements on audit-
Governmental Accounting Standards Board (GASB) (1987). ing standards for financial audits as declared by the Audit-
Objectives of Financial Reporting. (Concept Statement No. 1). ing Standards Board of the American Institute of Certified
Norwalk, CT: GASB of the Financial Accounting Founda- Public Accountants (AICPA), unless specifically excluded
tion.
in the guidance in the Yellow Book. The AICPA general
Governmental Accounting Standards Board (GASB) (1999). standard on criteria, and the fieldwork and reporting stan-
Basic Financial Statements—and Management’s Discussion and
Analysis—for State and Local Governments (Statement of Gov- dards and related statements for attestation engagements,
ernmental Accounting Standard No. 34). Norwalk, CT: are also included, unless excluded specifically (p. 8).
GASB of the Financial Accounting Foundation.
Governmental Accounting Standards Board (GASB) (2005). LIMITATION OF THE YELLOW
Codification of Government Accounting and Financial Report-
ing Standards. Norwalk, CT: GASB of the Financial Account- BOOK
ing Foundation. The title, Government Auditing Standards, is somewhat
Office of Management and Budget (OMB) (1996). Bulletin 97- misleading, because the guidance extends to engagements
1, Form and Content of Agency Financial Statements. U.S. that are not audits. The June 2003 edition, considered a
Government, Washington. DC. revision of the edition issued in June 1994, is, however,
markedly different. In addition to audits, the 2003 edition
includes guidance for engagements.
Mary L. Fischer
In the 2003 edition, even though nonaudit engage-
ments are included, the same statement is required in
reports of all engagements, which is “that the engagement
GOVERNMENT was made in accordance with GAGAS.” Yet, engagements
AUDITING STANDARDS that are reviews or agreed-upon procedures have different
requirements, which do not include the rigorous stan-
Government Auditing Standards, often referred to as the
Yellow Book, is the publication that presents generally dards of audits. The statement “in accordance with
GAGAS” is not sufficiently specific since strategies and
accepted government auditing standards (GAGAS) prom-
ulgated under the leadership of the comptroller general of procedures differ markedly among audits (or examina-
the United States, who heads the U.S. Government tions), reviews and agreed-upon procedures. The reader
Accountability Office. (At the time of the 2003 revision of should be provided with more identifying information.
the standards, the name of this office was the U.S. Gen- The Auditing Standards Board of the AICPA, on the
eral Accounting Office.) other hand, provides guidance for reporting that requires
reports to state explicitly the type of engagement com-
THE AUTHORITY OF pleted and the guidance followed. A basic requirement for
GOVERNMENT AUDITING any report provided by a public accountant is that the
STANDARDS report must not be any way be misleading or incomplete
The Yellow Book includes standards to guide all audits of as to its nature, scope, and level of assurance.
governmental units, irrespective of the level of the unit, as
well as guidance for reviews and agreed-upon procedures. THE GUIDANCE FOR AUDITS AND
The comptroller general noted: EXAMINATIONS
These standards are broad statements of auditors’ Financial audits, attestation examinations (considered an
responsibilities. They provide an overall frame- equivalent term to audits), and performance audits are
work for ensuring that auditors have the compe- guided by GAGAS.

346 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION