What is the Hardest Part about Complying with Generally Accepted Government Auditing Standards?

Compliance with generally accepted government auditing standards is essential. But, it’s not as easy as you’d think! Below are the five hardest parts of complying.

1. Meeting independence standards

The hardest part of complying with generally accepted government auditing standards is meeting the independence standards.

Any time an auditor encounters a threat to their auditor independence, it triggers a series of decisions and memos that have to be included in the audit documentation. And that is no fun at all.

What constitutes a threat? Anything that would make someone doubt the veracity of the audit results. For instance, maybe the auditor helped the auditee develop the controls that the auditor is evaluating on their audit.

Auditor independence and objectivity is the most significant quality of an auditor, so the emphasis on it in the standards is understandable. Without it, the users of the audit report can’t trust that what the auditor says is valid.

2. Including the elements of a finding in the audit report

The second most difficult part about complying with generally accepted government auditing standards is including the elements of a finding in the audit report

The elements (the condition, effect, cause, criteria and recommendation) look easy on paper, but applying them is anything but easy.

The cause is particularly hard to determine and then to prove with test work and many auditors are in the bad habit of using the effect statement to forecast undesirable future events.

3. Continuing education requirements

The third most difficult part about complying with GAGAS is the continuing education requirement

The Yellow Book (the slang name for generally accepted government auditing standards) asks auditors to get 24 hours of continuing professional education in topics related to government auditing, government environment, or specific or unique environment in which the audited entity operates.

And that’s not all the GAO (the author of the Yellow Book) requires; see this video for a more thorough explanation.

4. Following every must and should

The fourth most difficult part is following every must and should

GAGAS conveniently lists every requirement the auditor must follow in boxes. So, as you are reading the standard you can easily distinguish between what is required (indicated by including a ‘must’ or a ‘should’ in the statement) because it is in a box and what is guidance because it is included outside the box.

But the problem is there is a lot of requirements inside the box and following all of the standards is no small feat. And that leads us to our fifth difficult part…

5. Layers of review

The fifth most difficult part of complying with generally accepted government auditing standards is the layers of review

The Yellow Book standards are all about guiding auditors to create high quality audits. And in order to ensure the quality of any product, it has to be reviewed and compared to the quality standard before it is finalized.

The Yellow Book builds in reviews at a minimum of three levels – supervisory reviews, monitoring reviews, and peer reviews.

Supervisory review must be performed before each audit report is issued. Monitoring review occurs annually and covers more than just the audit documentation. And peer reviews take place every three years.

That gives your audit documentation and your audit report at least three chances to be scrutinized. And although we like to do that to our auditees, we find out it isn’t that fun when it is done to us.

Learn more:

If you want to learn more about the topics covered in the generally accepted government auditing standards (also known by the acryonym GAGAS), I recommend you look at the index in the standard itself.

I also welcome you earn some CPE while you learn by enjoying the Yellow Book Standards for Performance Auditors bundle or the Yellow Book Standards for Financial Auditors bundle.