The American Institute of Certified Public Accountants (AICPA) establishes the minimum standards certified public accountants (CPAs) must follow when they perform any audit In the United States. These standards are promulgated through the AICPA’s Statements on Auditing Standards or SAS’s; and are referred to as generally accepted auditing standards or GAAS.
Auditing standards have evolved over the last four decades to ensure consistency and uniformity in the performance of audits.
The US Government Accountability Office (GAO) establishes the standards CPAs must follow when they perform the audits of state and local governments, and non-governmental organizations that receive government funds. GAO auditing standards are promulgated in the publication Government Auditing Standards; and are referred to as generally accepted government auditing standards or GAGAS. The book in which these standards are promulgated has a bright yellow cover, so Government Auditing Standards are often referred to as “Yellow Book standards.”
CPAs that perform audits of local auditees in Louisiana must follow the auditing standards promulgated by both the AICPA and the GAO.
If the local auditee expended federal funds of $1,000,000 or more, the CPA must also follow the audit requirements of Title 2 of the U.S. Code of Federal Regulations (CFR), Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)(opens in new tab). Additional procedures are performed during a Uniform Guidance audit to determine whether the expenditure of federal funds was done in accordance with federal law.
Generally Accepted Auditing Standards And Generally Accepted Government Auditing Standards
The Louisiana Governmental Audit Guide (LAGAG) is authorized by Louisiana Revised Statute 24:513 A. (5) (a) (i) to set forth the standards by which the engagements of local governments and quasi-public organizations (local auditees) are to be performed. The LAGAG is jointly produced by the Louisiana Legislative Auditor (LLA) and the Society of Louisiana Certified Public Accountants.
Although the LAGAG is intended to assist CPAs in performing their audits and other engagements for local auditees, it does not include a detailed analysis of the professional auditing and accounting standards a CPA must consider during his or her audit, review/attestation or compilation engagements; nor is it a substitute for professional judgment. CPAs must reach their own conclusions through research of all applicable auditing and accounting standards, in addition to the LAGAG, in the performance of their local auditee engagements.
In addition, although the LAGAG is intended to assist local auditees, it does not include all the legal and accounting information an agency needs to perform its operations; nor is it a substitute for professional, legal or accounting advice; or professional or personal judgment. Local auditees should use the information in the LAGAG, in conjunction with the guidance of the professionals most familiar with the particular facts and circumstances regarding their agency, in the performance of their operations.
For questions and comments about the LAGAG, please contact LLA at (225) 339-3800.