Government auditing standards known as the yellow book provide a framework for performing highquality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. The revised standards also known as the yellow book, or gas were restructured by the gao to separate the standards requirements from the application guidance see the sidebar restructured yellow book. Auditors cannot prepare financial statements from clientprovided trial balances or accounting records as this creates a significant threat to independence. Although the 2018 yellow book changed the rules regarding auditor independence, it did not change the responsibility of management with. The biggest and most useful change is that requirements are now. Yellow book revisions update independence guidance journal of. Yellow book revisions update independence guidance. The 2018 yellow book is here and there are several key changes your.
The revised version has been reorganized and realigned with the aim of making it easier for professionals to find relevant rules when performing research. The yellow book is used by auditors of government entities, entities that receive government awards, and other audit organizations performing yellow book audits. The author summarizes the most significant changes in the new yellow book, with particular focus on the new standards for evaluating threats to auditor independence. Major changes for performance audits and internal controls. Here is a list of the changes that caught my eye in the order they appear in the revised edition. The government accountability office gao published a revised version of the generally accepted government auditing standards gagas, also known as the yellow book, which includes substantive changes to the independence rules when a firm performs bookkeeping or financial statement preparation services for a client. The most significant changes are the expanded independence requirements related to the. The new yellow book is effective for financial audits, attestation engagements, and. Key 2018 yellow book independence rule changes 2018 yellow book independence guidance for government audit organizations 15 recognizes that audit organizations in government entities frequently provide services that differ from the traditional professional services a firm provides these types of services are often provided. Yb yellow book key changes made in the 2018 yellow book. Auditor independence the standards guide auditors who prepare the financial statements of audited entities whose services may impair their. While the effective date for financial audits may seem far off, keep in mind that the 2018 yellow book revises the independence rules and that auditors need to be independent for the entire audit period. Getting a handle on 2018 revisions to the yellow book teammate. The yellow book is used by auditors of government entities, entities that receive government.
Auditors of federal, state, and local government programs use these standards to perform their audits and produce their reports. It outlines the requirements for audit reports, professional qualifications for auditors, and audit organization quality control. Hello fellow audit nerds i just finished comparing the 2011 yellow book to the 2018 yellow book. By issuing comment letters, gao promotes the development of high quality. The yellow book provides standards and guidance for auditors and audit organizations, outlining the requirements for audit reports, professional qualifications for auditors, and audit organization quality control. How the new 2018 yellow book impacts your audit eide bailly llp. Therefore, you will have to consider the auditor independence provisions of the 2018 yellow book prior to the effective date.