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Yellow Book (GAGAS) CPE Requirements

The Government Accountability Office has quite a lot to say about continuing education and if you are subject to their requirements, you are going to have an awful lot to do! Here are a few quotes from the 2011 version of the yellow book along with my interpretation of them in hopes of helping you understand what kind of training – and how much training – you will need to get every two years to comply with the standard.

3.72 The staff assigned to conduct an audit in accordance with GAGAS should collectively possess the technical knowledge, skills, and experience necessary to be competent for the type of work being performed before beginning work on that audit. The staff assigned to a GAGAS audit should collectively possess

a. knowledge of GAGAS applicable to the type of work they are assigned and the education, skills, and experience to apply this knowledge to the work being performed;

b. general knowledge of the environment in which the audited entity operates and the subject matter;

c. skills to communicate clearly and effectively, both orally and in writing; and

d. skills appropriate for the work being performed; skills in

(1) statistical or nonstatistical sampling if the work involves use of sampling;

(2) information technology if the work involves review of information systems;

(3) engineering if the work involves review of complex engineering data;

(4) specialized audit methodologies or analytical techniques, such as the use of complex survey instruments, actuarial-based estimates, or statistical analysis tests, as applicable; or

(5) specialized knowledge in subject matters, such as scientific, medical, environmental, educational, or any other specialized subject matter, if the work calls for such expertise.

Thank you so much GAO for that word ‘collectively!’ That means that each individual auditor doesn’t have to bring all of those bits of knowledge to the team. The quality reviewer and peer reviewer will assess whether someone on the team knows GAGAS, and someone knows the environment you are auditing in, and someone can cipher, and someone with the specialized skills that you need to get the job done. The word ‘collectively’ allows new professionals to become auditors. Now here is the paragraph that talks about the hours required:

3.76 Auditors performing work in accordance with GAGAS, including planning, directing, performing audit procedures, or reporting on an audit conducted in accordance with GAGAS, should maintain their professional competence through continuing professional education (CPE). Therefore, each auditor performing work in accordance with GAGAS should complete, every 2 years, at least 24 hours of CPE that directly relates to government auditing, the government environment, or the specific or unique environment in which the audited entity operates. Auditors who are involved in any amount of planning, directing, or reporting on GAGAS audits and auditors who are not involved in those activities but charge 20 percent or more of their time annually to GAGAS audits should also obtain at least an additional 56 hours of CPE (for a total of 80 hours of CPE in every 2-year period) that enhances the auditor’s professional proficiency to perform audits. Auditors required to take the total 80 hours of CPE should complete at least 20 hours of CPE in each year of the 2-year periods. Auditors hired or initially assigned to GAGAS audits after the beginning of an audit organization’s 2-year CPE period should complete a prorated number of CPE hours.

Let me point out the main points of this paragraph. Four roles on the audit: Plan, direct, perform, report. The first sentence distinguishes between four roles on an audit. This is important, because later in the paragraph, those who perform may be able to bypass the 56 hour requirement. 24 hours in three buckets: 1. government auditing, 2. government environment, 3. specific or unique environment. Anything on this site satisfies one of the first two buckets. But as much as I’d like you to stick around and buy something from me, I do need to point out that your 24 hours doesn’t have to be governmental. For instance, I audited a pension system’s investments – so that year, my 24 hours was earned in an investment class. 56 hours in auditing: The GAO wants auditors to be experts in auditing – not dabblers. So, in addition to the 24 hours, most auditors must also get 56 hours in topics that enhance their proficiency to conduct audit. Estate planning and personal taxation probably won’t qualify – although this is an admittedly wide category. Planners, directors, reporters are in for the full meal deal: 80 total hours (24 + 56) . If you even touch a yellow book audit in order to plan, direct, or report the engagement, you are in for the full 80hours. Performers could be exempt: Those auditors who spend a minimal amount of time performing (Iread that as fieldwork) governmental engagements are exempt from the 56 hours. What defines minimal? Less than 20% of their year spent on governmental engagements. That is an awful lot of CPE! I bet you still have questions. Maybe you want to know when the measurement period starts or what topics qualify for the 24 hours. Those more detailed questions are answered on the GAO’s website in a CPE Q&A document at http://www.gao.gov/govaud/ybcpe2005.pdf. And if that doesn’t answer your questions, please write to me at Leita@yellowbook-cpe.com or to the GAO’s question answering folks at yellowbook@gao.gov.