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Governmental Auditing Topics

Governmental Accounting Topics

Oklahoma Municipal State Laws

Governmental Auditing Update

 GAO Issues Proposed Revisions to the Yellow Book

In June 2006, the Governmental Accountability Office (GAO released its proposed changes to Government Auditing Standards (the Yellow Book). The proposed revisions are wide-ranging and will affect future Yellow Book audits and attestation engagements. A copy of the Exposure Draft is available at the GAO web site www.gao.gov. Comments on the proposed changes are due on or before August 15, 2006.

AICPA Issues new Audit Guide “Government Auditing Standards and Circular A-133, with conforming changes as of May 1, 2005”

The 2005 AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits, with conforming changes as of May 1, 2005 has been released. The Audit Guide presents guidance for the audits of financial statements conducted in accordance with Government Auditing Standards (also referred to as the Yellow Book), issued by the Comptroller General of the United States of the U.S. Government Accountability Office (GAO).  This Audit Guide also presents the recommendations of the AICPA Single Audit Working Group for the conduct of audits in accordance with the Single Audit Act Amendments of 1996 (the Single Audit Act) and Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations (Circular A-133). This Audit Guide incorporates guidance contained in the Statement on Auditing Standards (SAS) No. 74, Compliance Auditing Considerations in Audits of Governmental Entities and Recipients of Governmental Financial Assistance.

Auditors of the financial statements of entities subject to the guidance in this Audit Guide also should refer to other applicable AICPA Audit and Accounting Guides, including State and Local Governments.

Effective Date: The provisions of the Audit Guide are applicable to audits of fiscal years beginning after June 30, 1996, in which the related fieldwork commences on or after March 1, 1998.  The provisions of this Audit Guide, including the conforming changes, that arise from AICPA auditing standards, Government Auditing Standards, the Single Audit Act, and Circular A-133 are effective as of the effective date of those standards and requirements.  This Audit Guide does not change the effective dates of those standards and requirements. Conforming changes found within the Guides (i.e. example audit reports, etc.) are to be implemented upon issuance of the Guides. 

AICPA Issues Updated “State and Local Governments”
Audit and Accounting Guide, with conforming changes as of May 1, 2005”

The AICPA has released its 2005 AICPA Audit and Accounting Guide, State and Local Governments, with conforming changes as of May 1, 2005.  This Guide applies to all state and local governments as defined in Chapter 1 of the Guide, “Overview and Introduction.” While the Guide primarily addresses audit issues, it also provides governmental accounting guidance.  The Guide presents all the AICPA State and Local Government Audit Guide Revision Task Force (Task Force) recommendations on and descriptions of financial accounting and reporting principles and practice for state and local governments. The generally accepted accounting principles (GAAP) related accounting provisions of this Guide have been cleared by the Government Accounting Standards Board (GASB).

Effective Date: The 2005 Guide is effective for specific accounting and auditing guidance of a state or local government’s financial statements for the first fiscal period ending after June 15, 2003, in which the government does apply, or is required to apply, the provisions of GASB-34 or GASB-35. Conforming changes found within the Guides (i.e. example audit reports, etc.) are to be implemented upon issuance of the Guides. 

AICPA Launches Governmental Audit Quality Center

Over the past year, the AICPA has introduced a new service that is committed to helping its members achieve the highest standards in performing quality audits. The concept of Audit Quality Centers was introduced in 2003 and establish a series of firm-based voluntary membership units designed to help CPAs meet the challenges of performing quality audits in unique and complex areas. The three new Audit Quality Centers to-date, which were approved by the AICPA Governing Council in fall 2003, focus on audits performed in three areas of critical importance to the public interest, public company audits, employee benefit plan audits and governmental audits. The most recent of the Centers to be unveiled is the Governmental Audit Quality Center. The Governmental Audit Quality Center’s primary purpose is to promote the importance of quality governmental audits and the value of such audits to purchasers of governmental audit services. According to the AICPA, each year more than 6,300 CPA firms perform what is estimated to be over 100,000 governmental audits.

The specific Membership requirements for the Governmental Audit Quality Center include:

  • Designating an audit partner who has firm-wide responsibility for the quality of the firm’s governmental audit practice
  • Establishing firm-wide quality control programs specific to the firm’s governmental audit practice
  • Establishing policies and procedures to comply with applicable professional standards and Center membership requirements
  • Performing annual internal inspections that include a review of the firm’s governmental audit practice
  • Ensuring public availability of information about the firm’s most recent peer review
  • Maintaining AICPA membership in good standing by all audit partners in the United States
  • Paying annual dues.

The Governmental Audit Quality Center website is www.aicpa.org/gaqc, and is now available to those wishing to learn more about the Center or to become a member.

GAO Issues CPE Exposure Draft

The Government Accountability Office (GAO) has issued an exposure draft entitled Government Auditing Standards: Guidance on GAGAS Requirements for Continuing Professional Education.  This proposed guidance document, when finalized, will replace the April 1991 document entitled Interpretation of Continuing Education and Training Requirements.  Major changes from the 1991 CPE Interpretation include:

  • Clarification that CPE programs should have learning objectives in accounting and auditing.
  • Expanded and modernized the list of example topics that would satisfy the 80-hour requirement.
  • Added a section that indicates that generally taxation CPE would not meet the requirements unless taxation is related to the subject matter of audits.
  • Makes other changes to be more consistent with the CPE guidelines of NASBA.

 OMB Circular A-133 2003 Revisions

In June 2003, the Office of Management and Budget issued revisions to OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Among the revisions to the Circular is an increase in the threshold that triggers the requirement for a single audit from $300,000 to $500,000. However, this threshold change is not effective until periods ending after December 31, 2003. Early implementation is not permitted. Access to the Federal Register notice regarding the revision can be found at the OMB web site at http://www.whitehouse.gov/omb/fedreg/062703_audits.pdf

 Government Auditing Standards (the Yellow Book) – 2003 Revision

In July 2003, the General Accounting Office (GAO) released its revisions to the Yellow Book standards for audits of governmental units. The revision includes changes throughout the entire set of standards. The revisions are effective for financial audits and attestation engagements of periods ending on or after January 1, 2004, and for performance audits beginning on or after January 1, 2004. The entire text of the Yellow Book revision can be reviewed or obtained from the GAO’s website.

Governmental Auditing Topics

Governmental Accounting Topics

Oklahoma Municipal State Laws

 

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