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Business and Policy Areas
Business and Policy Areas

Exposure Draft of Proposed Changes to Government Auditing Standards Comments

June 17, 2002

Mr. Michael C. Hrapsky
Senior Project Manager,
Government Auditing Standards
U.S. General Accounting Office
Room 5X16 (FMA)
441 G Street, NW
Washington, DC 20548

Re: Exposure Draft of Proposed Changes to Government Auditing Standards Comments

Dear Mr. Hrapsky:

Thank you for the opportunity to provide input to the General Accounting Office’s proposed revisions to the Government Auditing Standards. We appreciate the considerable effort that has been invested in this project as well as the consideration you give to input received from the field. This letter provides our comments on the Exposure Draft (ED) referenced above.

The National Association of College and University Business Officers (NACUBO) represents more than 2,100 colleges and universities. Our members include both public and private campuses, as well as independent primary and secondary schools. Our primary representatives include the chief financial officers of these organizations, although many of their staff also are active participants in NACUBO programs and activities.

NACUBO recognizes the importance of having effective auditing standards to assure the quality of programs operated with public funds. We have been an active participant in various projects related to financial accounting and reporting standards, including playing an active role with the Financial Accounting Standards Board, the Governmental Accounting Standards Board, and various AICPA committees. In each of these activities, we have tried to balance the needs of users against the costs and other impacts of various standards.

Neither NACUBO nor its institutional members maintain a primary focus on auditing. Yet the auditing standards affect the institutions and their operations. Our reaction to the proposed changes is positive but we feel it necessary to suggest changes to one  specific aspect of the ED. This has to do with the new requirement in paragraphs 5.6 and 6.27 to include, as part of the audit report, "…information on compliance with laws and regulations and internal control that is required by GAGAS but not required by AICPA standards." According to the ED, failure to do so "…is not in the public interest." We do not agree with the premise that it is not in the public interest to omit these references.

As you may realize, it is not uncommon for colleges and universities to issue audited financial statements for various purposes. When financial statements are issued for purposes related to compliance with federal program requirements it is appropriate to refer to both GAGAS and AICPA standards in the audit report. In other cases, however, we believe it is inappropriate to include the GAGAS references in the audit report. In fact, we believe this additional language creates clutter and has the potential to confuse readers of the audit report. We urge those responsible for finalizing the standards to remove this requirement and maintain the guidance provided in existing standards at paragraph 5.14.

We appreciate this opportunity to comment on this ED and look forward to answering any questions you may have about the above comments. Please direct your questions to Larry Goldstein at 434-973-1731 or


Mark Olson
Senior Vice President
Larry Goldstein
Senior Fellow