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 $750,000 or more, the CPA must also follow the audit requirements of the US Office of Management and Budget publication Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Additional procedures are performed during a Uniform Guidance audit to determine whether the expenditure of federal funds was done in accordance with federal law.
Questions:
- What is the difference between generally accepted auditing standards and generally accepted accounting principles?
- What is the difference between an audit performed in accordance with generally accepted auditing standards (GAAS) and an audit that is performed in accordance with generally accepted government auditing standards (GAGAS)?