How Much Yellow Book CPE Should I Earn?

In this episode of THE SAMPLE, Leita Hart-Fanta, CPA answers the question, “How Much Yellow Book CPE Should I Earn?”

Welcome to The Sample, a quick discussion of auditing concepts and terms that will help you do your work. Conducting an audit in accordance with auditing standards is no small feat and I want to support you. We’ll be referring to the GAO, IIA and AICPA literature to bolster our conversations. Let’s get started.

Transcript for HOW MUCH YELLOW BOOK CPE SHOULD I EARN?

In this episode I answer the question, “How much Yellow Book CPE should I earn?” Let’s cover some of the terms I’m throwing out there right now.

What does the term CPE mean?

First of all is CPE. What does that mean? Continuing Professional Education. It’s the main way that an audit standard helps make sure that you’re competent. It’s because your education never ends. You get your degree, but that’s not the end. You keep learning as you go, because things are always changing.

So as we will see, we need to earn 80 hours of continuing professional education every two years to stay in compliance with the standards.

GAO Yellow Book CPE Requirements

The standards we’re talking about today are the GAO’s Yellow Book, also known as Generally Accepted Government Auditing Standards, also known as GAGAS. So in order to comply with these standards, we have to earn our CPE’s so that we’re competent to perform the work.

What is the work? It can be an attestation engagement. It can be a performance audit. It can be a financial audit, or a very rare type called a review of financial statements, which I didn’t bother to put here because it is so rare.

You can do a variety of work under Yellow Book standards.

Yellow Book CPE is a should

When you’re finished, what you want to do, is you want to have a sentence like this in your audit report. Because you worked hard to comply with the standards and you say, “We conducted this audit in accordance with generally accepted government auditing standards.” It might not be a performance audit. It might be a financial audit. It might be an attestation engagement, and you’re proudly going to declare that.

But you can’t declare that unless you follow every “must” and “should” statement in the standards, and continuing education is one of those standards.

See, CPE is a “should.” You should maintain your professional competence by completing 80 hours of CPE in every two year period.

That’s a lot of hours, but where it gets a little tricky is that the GAO’s kind of specific about what kind of hours you earn.

What comprises these hours?

But if you look closer, it’s not real specific. 24 hours and three government sounding buckets. We’ll talk about that in a minute.

The 56 hours

And then this 56 hours, in just about any subject matter, that will enhance your ability to conduct an engagement. So this is very broad, the 56 hours.

Let’s say you’re a CPA in public practice, and you do taxes for part of the year, and you do estate planning and investment advising. Those things are probably not going to help you conduct a government audit engagement. So even though they’ll help you with your 80 hours of CPE to keep your CPA license (which all CPAs have to get that in order to keep their license), it’s not going to help you with this Yellow Book requirement which asks that you get training to do auditing, or attestation engagements.

The 24 hours

Now, the 24 hours is a little bit more specific, and it comes from one of three buckets. I was able to work on a retirement system for many years, audit a government retirement system. The first bucket here, government environment, tells me that I could have gone (and I didn’t do this – it would have been cool) to a conference for retirement systems. It could’ve had nothing to do with auditing, nothing to do with accounting, and just to understand what kind of challenges face retirement systems. That would have qualified as part of my 24 hours.

Or I could have done the traditional Yellow Book here with this government auditing. I could have taken a Yellow Book update, or a GASB update. That would have helped me out.

Or (and one year I did do this), I went to learn about the specific or unique environment in which the entity operates. So my audit subject matter was investments, and I didn’t know an awful lot about investments, and so the office sent me to a three-day training on how large institutions trade investments. So instead of going to another GASB update or Yellow Book update, I was able to earn my 24 hours with that class.

If your have mores specific questions about Yellow Book CPE

Now, there are lots of little tricky ins and outs about the CPE requirements. Sometimes people have questions about, “When do you start the two year period?” Is anybody exempt? What qualifies under each of these buckets?

The GAO’s Yellow Book dedicates a whole long chapter to those kind of questions so begin by looking there.

And if you still, after reading that chapter on competence, which is the name of that chapter, you’re still wondering, you can always write to the GAO themselves at YellowBook@GAO.gov. They’re very friendly, very open, and will tell you whatever you want to know. And of course you’re welcome to ask me.

That wraps it up

That wraps it up for another episode of The Sample. True to the nature of a sample, we didn’t talk about everything, so you’ve probably got questions. Write to me at leita@yellowbook-cpe.com and I’ll do my best to fill in the blanks. Thanks for playing.

For More Info:

Yellow Book Standards Bundle

Yellow Book Auditing Standards 2018: Live & Customized

The 2018 GAO Yellow Book Interpreted

2018 Yellow Book Standards for Financial Audits – Video Course

GAGAS Performance Audit Standards – Video Course