GAO revises yellow book - Update - United States General Accounting Office's government auditing standards

THE U.S. GENERAL Accounting Office (GAO) recently released a new edition of its Government Auditing Standards, also known as the Yellow Book, the fourth since the standards' inception in 1972. Before being finalized, revisions were put through a rigorous review process that included public comments and input from the Comptroller General's Advisory Council on Government Auditing Standards, which includes 20 experts in financial and performance auditing.
After all comments were received and reviewed, changes were made to three areas of the 1994 revision, including amendments 1 through 3. The new version:
* Redefines the types of audits and services covered by the standards, including an expansion of the definition of performance auditing to incorporate prospective analyses and other studies and the addition of attestation as a separate type of audit.
* Provides consistency in the fieldwork and reporting requirements among all types of audits defined under the standards.
* Strengthens the standards and clarifies the language in areas that, by themselves, do not warrant a separate amendment to the standards.
Upon release of the new edition, David M. Walker, U.S. comptroller general and head of the GAO, emphasized that the Yellow Book represents only a starting point for government audit professionals. "Auditors will face many situations in which they could best serve the public by doing work exceeding the standards' minimum requirements," he said. "As performance and accountability professionals, we should not strive just to comply with minimum standards, which represent the floor of acceptable behavior, but we need to do the right thing according to the facts and circumstances of each audit situation." Walker called on auditors to seek opportunities to do additional work when and where it is appropriate, particularly in connection with testing and reporting on internal controls.
The new standards are applicable for financial audits and attestation engagements ending on or after Jan. 1, 2004, and for performance audits beginning on or after Jan. 1, 2004. The Yellow Book--along with the major changes from the 1994 edition--is available on the GAO Web site at www.gao.gov/govaud/ ybko1.htm.