GAO Announces New Compliance Date For Independence Rules

Accountants subject to the new auditor independence rules issued by the General Accounting Office (GAO) earlier this year have been given a small reprieve. The rules affect auditors on engagements that must comply with Government Auditing Standards, commonly referred to as the "Yellow Book." These rules apply to audits of government entities, government contractors, and federally funded organizations.

The new Yellow Book rules include guidelines for separating auditors from performing management functions, making management decisions, and auditing their own work. The rules were scheduled to apply to audits beginning on or after October 1, 2002. The GAO has extended the effective date, which is now set for January 1, 2003.

It has come to the attention of the GAO that some audit firms, particularly smaller organizations and those located in remote areas, were not aware of the new guidelines or had questions that had not yet been answered.

To accommodate these organizations, the GAO has extended the effective date for the new independence rules to nonaudit services contracted for by June 30, 2002, provided the work is completed by June 30, 2003. In addition, the GAO has published a document, "Government Auditing Standards: Answers to Independence Standards Questions," which is currently available on the Internet and will be available in print within two weeks. This document clears up much confusion surrounding the new rules.

Nonaudit services that are allowed under the new guidelines include providing routine advice to an audited entity and its management to assist in activities such as establishing internal controls or implementing audit recommendations; answering technical questions; providing training; providing tools and methodologies such as best practice guides, benchmarking studies, and internal control assessment methodologies; collaborating with others to strengthen professional standards; developing audit methodologies; and providing legal/accounting opinions or other assistance to a legislative body.

You may like these other stories...

By Jason Bramwell Government leaders of eight of the world's largest economies pledged on June 18 to take a tougher stance on fighting tax evasion. The Group of Eight (G8) leaders, who met in Northern Ireland,...
By Jason BramwellAttorney General Eric Holder is scheduled to testify on May 15 before the House Judiciary Committee, one day after he announced the Justice Department has opened a criminal investigation of the IRS for...
By Jason BramwellPresident Barack Obama says he will not tolerate political bias at the IRS and promised to get to the bottom of the agency's admitted targeting of conservative groups, according to a May 13 article in...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.