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DEFINE GENERALLY ACCEPTED AUDITING STANDARDS PROFESSIONAL

The potential for unilateral dissolution by a government with net assets reverting to the government.

Popular election of officers or appointment (or approval) of a controlling majority of the members of the organization’s governing body by officials in one or more state or local government.

It cites a definition of “public corporation” from Black’s Law Dictionary, however, as “as instrumentality of the state governed by those deriving their authority from the state.” Other entities are also considered governmental under the definition agreed to by GASB and FASB if they have at least one of the following three characteristics: These AICPA guides effectively define “governments” (not “state and local governments”) as “public corporations and bodies corporate and politic” created for the administration of public affairs. It appears it was never intended that this definition be incorporated directly into any authoritative GASB or FASB standards. 104), which, in turn, contain only nonauthoritative guidance (Category B GAAP). In 1996, FASB and GASB agreed to a definition of “government,” which now appears only in certain AICPA audit and accounting guides, including State and Local Governments (para. GASB standards constitute authoritative GAAP for “state and local governments” only but do not clearly define that population. GAGAS are set forth in a booklet entitled Government Auditing Standards (commonly called the “Yellow Book”) that is issued and updated periodically (2018, ) by the Comptroller General of the United States, Government Accountability Office (GAO).

In addition to GAAS, generally accepted government auditing standards (GAGAS) apply to certain audits of the financial statements, primarily of those federal, state and local governments and their agencies and others that receive and expend in one reporting year federal assistance funds in excess of a statutory minimum.

Along with FASB standards, all of these are considered authoritative when applicable and part of GAAP. Specialized accounting standards for state and local governments, however are set by GASB, while those applicable to the federal government and its agencies by the Federal Accounting Standards Advisory Board (FASAB). For nongovernmental entities, GAAP is governed principally by FASB, and GAAS by either the AICPA’s Auditing Standards Board (ASB) or the PCAOB. accounting and auditing standards are applicable to the financial statements of governmental entities and certain other entities that are significantly funded through government assistance.

DEFINE GENERALLY ACCEPTED AUDITING STANDARDS PROFESSIONAL

This article attempts to identify, address, and clarify these areas of confusion so that auditors can better apply professional judgment to resolve them.ĭistinctly different sets of U.S. But due to inconsistencies, vagaries, and controversies inherent to, or omitted from, the professional standards and nonauthoritative literature, it is understandable why auditors have historically been confused about how and which of these specialized standards are to be applied in various circumstances. Most of these (65%) are members of the AICPA’s Governmental Audit Quality Center (GAQC), a voluntary membership center that serves as a comprehensive resource for governmental auditors. An estimated 3,000 audit practice units in the United States engage in state and local governmental audits.