For example, auditors at the state and local levels of government may be required by state and local laws and regulations to follow GAGAS. Auditors may also be required to follow GAGAS by federal audit guidelines pertaining to program requirements, such as those issued for Housing and Urban Development programs and Student Financial Aid programs.
Being alert to such other laws, regulations, or authoritative sources may assist auditors in performing their work in accordance with the required standards. Leita yellowbook-cpe. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.
Forgot your password? Lost your password? Please enter your email address. You will receive mail with link to set new password. If you opt in above we will not share or otherwise distribute your information. The Yellow Book provides new application guidance on evaluating whether a client has sufficient skills, knowledge, or experience to oversee a nonaudit service.
If management lacks this ability, the firm should consider whether it can provide the nonaudit service and remain compliant with the Yellow Book independence standards. GAS Paragraphs 3. The new Yellow Book is effective for financial audits, attestation engagements, and reviews of financial statements for periods ending on or after June 30, , and for performance audits beginning on or after July 1, Early implementation is not permitted.
Firms need to evaluate independence with respect to the provision of nonaudit services during the period covered by the financial statements or other subject matter of the engagement and the period of professional engagement, which includes the period covered by the financial statements.
Therefore, firms should evaluate whether they will be able to implement safeguards to eliminate or reduce significant threats to an acceptable level under the new standards. In such cases, auditors should use professional judgment to comply with the applicable version of the standards. The firm performs no other nonaudit services for this client. The Yellow Book applies to services involving preparation of accounting records and financial statements the firm performs after July 1, Based on the requirements in Paragraph 3.
Per Paragraph 3. The firm considers threats to independence arising from these services in the aggregate and applies the following safeguards:. The firm assigns different personnel from different offices in the firm to the audit and nonaudit engagements. In addition, all audit engagements performed under the Yellow Book are subject to a second independent review by another partner in the firm.
The firm believes the combination of these safeguards will adequately reduce any self-review threats to an acceptable level. What if the firm has only one shareholder and two staff and is unable to assign different personnel to the engagements or provide a second reviewer on the audit or preparation of accounting records and financial statement work?
Assume the client is a small charitable organization and the cost to hire an outside CPA to perform an independent review of the services cannot be justified by the engagement fees. In that case, the firm may need to relinquish or scale back the scope of its nonaudit services if it wishes to continue performing audit services for the client.
Or the firm may resign from the audit engagement and perform only the preparation of accounting records and financial statement services. Independence would be impaired if the firm performed both the audit and nonaudit services described above without appropriate safeguards. Even if the firm concludes that the financial statement preparation services do not meet that threshold, providing preparation of accounting records and financial statement services still requires the firm to evaluate and then document the evaluation of threats to independence under Paragraph 3.
That is, the firm should evaluate the significance of threats and, when threats are significant, apply safeguards to eliminate or reduce the threat to an acceptable level.
The firm should consider the significance of the assistance provided to the subject matter of the audit and consider the following:. Any limitations on the provision of nonaudit services Paragraph 3. Smaller firms that typically audit smaller governmental and other entities subject to GAGAS are bound to be most impacted by clarifications in the Yellow Book.
These firms may be unable to assign separate personnel or other effective safeguards when providing audit and preparation of accounting records. As illustrated, if threats are significant and effective safeguards cannot be applied, firms may need to choose between the audit and preparation of accounting records and financial statement services.
Log in to apply your member discount. Add to Cart. Format Online. Level Basic. CPE Credits Author s Rebecca Meyer. Availability 1 year. Part of a discounted bundle. Product Details. The guidance you need. Baseline Gain an excellent baseline of information for understanding the Yellow Book, with guidance found in the revision of Government Auditing Standards. Identify the requirements and guidance related to independence. Recall the requirements for performing attestation and review of financial statement engagements and performance audits under GAGAS.
Credit Info. CPE Credits. This is a digital product. With full paid access the content will be available to you for 1 year after purchase date.
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