May 15, 2012 the yellow book update and new independence standards. Aicpa ethics code lesson 11 acct 4553 independence rules of the gao more independence rules. S105 yellow book the new independence rules and the. Jul 29, 2011 for other ideas, you can check out chapter 3 of the yellow book the gaos government auditing standards. Oct 23, 2018 in prior versions of the yellow book, the ethics, independence, and professional judgment standards were presented in different chapters. Every year the gao publishes a book that contains all of its updated rules and standards for conducting audits in the public sector.
Yellow book independence and preparing financial statements. It highlights provisions in the yellow books independence standards and compares them to the relevant independence provisions of the aicpa code of professional conduct. Understanding the changes to yellow book independence. In issuing the new standard, the comptroller general stated that protecting the public interest and ensuring public confidence in the independence of auditors of government financial statements, programs and. Aicpa yellow book gagas independence rules comparison. Yellow book revisions update independence guidance journal. The dol rules on nonattest services are more comprehensive than the aicpa independence rules. Government accountability office gao issued a revised version of the government auditing standards also known as the yellow book, which updated the independence rules. Not specific to the loan rule, our firm has taken on many new clients in the mutual fund space as a result of conflicts and independence issues encountered by large firms. The revised version has been reorganized and realigned with the aim of making it easier for professionals to find relevant rules when performing research. While similar in spirit to earlier guidance, this new framework represents a significant shift from a more rules based approach to auditor independence to a more principlesbased approach. In referencing the gao yellow books applicability to iro independence, the oig has further noted. Feb 07, 2020 above all, complying with the new independence rules requires a thoughtful approach to your accounting and audit choices. The government accountability office gao has recently updated the government auditing standards this year.
The government accountability office recently released a new version of government auditing standards, also known as the yellow book. The 2018 yellow book was recently updated and includes a significant change regarding auditor independence. Jun 25, 2019 an overview of the 2018 yellow book independence conceptual framework and related documentation requirements changes an understanding of how the 2018 yellow books independence rules compare to the aicpas rules resources for implementing the 2018 yellow book. Revised gao and aicpa independence rules audit conduct. Yellow book includes new guidelines for independence. This session will discuss the new independence rules affecting yellow book audits. 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 of federal, state, and local government programs use these standards to perform their audits and produce their reports. Many organizations are subject to reporting under generally accepted government auditing standards, also known as the yellow book. The aicpa code refers to services that do not require. Yellow book revisions update independence guidance.
Aug 21, 2019 the 2018 yellow book was recently updated and includes a significant change regarding auditor independence. Organizational independence for internal audit functions. This information is from the appendix to the yellow book where it explains the threats to independence in more detail than in chapter 3. Government auditing standards yellow book practice aids. Evaluation of a firms compliance with 2011 yellow book independence requirements related to nonaudit services. Recognize the requirements found in the 2018 government auditing standards yellow book. Many clients are subject to oversight and regulation by governmental agencies. Introduction purpose of the document to help aicpa members comply with the aicpa and yellow book standards, this document highlights provisions in the yellow book s independence standards1 and compares them to the relevant independence provisions of the aicpa code of professional conduct aicpa, professional standards, et sec. The yellow book update and new independence standards henry.
The generally accepted government auditing standards, also known as the yellow book, provides a framework for conducting highquality audits with competence, integrity, objectivity, and independence. New gao yellow book clarifies independence requirements. The dol permits auditors to perform recordkeeping whereas the aicpa rules. This aicpa practice aid titled, 2011 yellow book independence non audit services documentation practice aid, is intended to help auditors performing audits under the 2011 edition of government auditing standards referred to as the 2011 yellow book to comply with its independence rules. Want to find out more about the new yellow book rules. In which way do dol independence rules differ from the aicpa rules. Despite the fact that 2020 sounds so far away its not, it is important for auditors to remember how the independence rules work. As hinted at above, larger firms have more potential for independence issues given the significant volume of employees, relationships, and other activities. These are some of the least specific standards in the yellow book as all require the application of professionalism, maturity, and judgment. 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. The gao first issued the yellow book in 1972, and the current version was issued in 2011. Does your team meet the 2018 yellow book independence. In essence, auditors are no longer considered independent with respect to the audit if auditors prepare an organizations financial statements without having one or more safeguards in place. Below i tell you how to maintain your independenceand stay out of hot water.
Revised rules published in july by the government accountability office clarify a need for safeguards for practitioners when performing. In addition to the aicpa, who else sets independence rules. Feb 21, 2019 the most significant change made in the 2018 yellow book relates to the independence standards. Cdc yellow book travel advice will always be compatible with acip recommendations but may, on occasion, offer country and situationspecific guidelines for vaccine use. This document is intended to help aicpa members comply with the aicpa and yellow book standards. The dol permits auditors to perform recordkeeping, whereas the aicpa rules would not. Identify the revised requirements and guidance related to independence in the 2018 revision of the yellow book. Aicpa yellow book gagas independence rules comparison 2 conceptual framework approach the yellow book establishes a conceptual framework that auditors use to identify, evaluate, and apply safeguards to.
Government auditing standards yellow book practice aids and. The dol rules ban auditors from providing actuarial services to benefit plans that they audit. Be sure to involve us and financial advisors in these decisions. The yellow book is the annual publication by the gao of the generally accepted governmental auditing standards. Some of you may wonder, how is this update going to affect me. For example, the general accounting office gao sets independence rules that apply to entities audited under governmental auditing standards gas, also known as the yellow book requirements. Last revised in 2011, the yellow book is designed to help government auditors at the federal, state, and local levels produce highquality audits that reflect competence, integrity, objectivity, and independence. Here is an excerpt from the gaos government auditing standards that discusses internal auditor independence. 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. It highlights provisions in the yellow book s independence standards and compares them to the relevant independence provisions of the aicpa code of professional conduct. Be sure to involve your cpa and financial advisors in these decisions.