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GAO Issues Revised Yellow Book

February 6, 2007

The Government Accountability Office (GAO) has issued the 2007 revision of the Government Auditing Standards, commonly known as the “Yellow Book.” The new version contains final 2007 revisions to the standards, except for those included in the quality control and peer review sections in Chapter 3. These sections are being exposed for comment in response to the wide range of comments the GAO has already received on them. The comment deadline on the proposed new sections is March 30, 2007.

The overall focus of the revisions is to reinforce the principles of transparency, accountability, and quality in governmental auditing. This is achieved through a heightened emphasis on ethical principles, clarification of the impact of nonaudit services on auditor independence, enhancement of performance audit standards, and incorporation of new auditing standards’ language.

The effective date for the 2007 revision is for financial audits and attestation engagements for periods beginning on or after January 1, 2008, and for performance audits beginning on or after January 1, 2008.  For financial statement audits performed under GAGAS, the effective dates of new AICPA auditing standards will apply. Until the 2007 GAGAS standards become effective, auditors should adopt the terminology and definitions in SAS No. 112 when reporting on internal control deficiencies and include in their reports material weaknesses and other significant deficiencies in order to promote consistency in communicating and reporting on such internal control deficiencies.

The January 2007 revision is available only in electronic format and can be downloaded from the GAO Yellow Book Web Page.  The printed version of the complete 2007 revision will be available after the quality assurance and peer review sections are finalized and incorporated into the standards (expected late spring of 2007). 

NACUBO Resource: Sue Menditto, director, accounting policy.