The New Yellow Book

Chapter 6Standards for Financial Audits

Learning objectives

• Recognize the relationship of generally accepted government auditing standards (GAGAS or the Yellow Book) and AICPA Statements on Auditing Standards (SASs).
• Identify the additional requirements for conducting financial audits in accordance with GAGAS.
• Recognize the concepts of waste and abuse.
• Identify the additional GAGAS requirements for reporting on financial audits.

Introduction

Chapter 6 of the Yellow Book contains requirements and guidance for conducting and reporting on financial audits subject to GAGAS. Auditors conducting financial audits under GAGAS are required to comply with the AICPA SASs, which are incorporated into GAGAS by reference. GAGAS incorporates all sections of the SASs, including the introduction, objectives, definitions, requirements, and application and other explanatory material.

The AICPA Code of Professional Conduct is not incorporated into GAGAS by reference; however, the GAO realizes that certified public accountants (CPAs) may use or be required to use the AICPA Code of Professional Conduct in conjunction with GAGAS in the performance of their engagements.

The guidance and requirements contained in chapters 1-5 of the Yellow Book also apply to financial audits under GAGAS.

Additional GAGAS requirements for conducting financial audits

Chapter 6 outlines additional requirements for conducting financial audits with respect to the following areas:

• Compliance with standards
• Licensing ...