Applicability
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GAO-03-673G Government Auditing Standards > Chapter 1 Introduction > Applicability
1.04 The standards and guidance in this document apply to audits and attestation engagements of government entities, programs, activities, and functions, and of government assistance administered by contractors, nonprofit entities, and other nongovernmental entities. A number of statutes and other mandates require that auditors follow GAGAS. Where a statute or other mandate does not exist, auditors will find it useful to follow GAGAS in work regarding the use of government funds. If auditors hold themselves out as following GAGAS, regardless of whether the auditors are required to follow such standards, the auditors need to justify any departures from GAGAS.
1.05 The following are among the laws, regulations, and guidelines that require use of GAGAS:
a. The Inspector General Act of 1978, as amended, 5 U.S.C. App. (2000) requires that the statutorily appointed federal inspectors general comply with GAGAS for audits of federal establishments, organizations, programs,1 activities, and functions. The act further states that the inspectors general shall take appropriate steps to assure that any work performed by nonfederal auditors complies with GAGAS.
b. The Chief Financial Officers Act of 1990 (Public Law 101-576), as expanded by the Government Management Reform Act of 1994 (Public Law 103-356), requires that GAGAS be followed in audits of executive branch departments’ and agencies’ financial statements.
c. The Single Audit Act Amendments of 1996 (Public Law 104-156) require that GAGAS be followed in audits of state and local governments and nonprofit entities that receive federal awards.2 The Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, which provides the government-wide guidelines and policies on performing audits to comply with the Single Audit Act, also requires the use of GAGAS.
1.06 Auditors need to be alert to other laws, regulations, or other authoritative sources that could require the use of GAGAS. For example, state and local laws and regulations may require auditors at the state and local levels of government to follow GAGAS. Also, the terms of an agreement or contract may require auditors to comply with GAGAS. Federal audit guidelines pertaining to program requirements, such as those issued for Housing and Urban Development programs and Student Financial Aid programs, may also require that GAGAS be followed.
1.07 Even if not required to do so, auditors may find it useful to follow GAGAS in performing audits of federal, state, and local government programs as well as in performing audits of government awards administered by contractors, nonprofit entities, and other nongovernment entities. Many audit organizations not formally required to do so, both in the United States of America and in other countries, voluntarily follow GAGAS.
1.08 Auditors may provide professional services, other than audits and attestation engagements, that consist solely of gathering, providing, and explaining information requested by decision makers or by providing advice or assistance to officials of the audited entity. GAGAS are not applicable to nonaudit services, which are described more fully in chapter 2. However, providing nonaudit services may affect an audit organization’s independence to conduct audits, which is discussed in chapter 3.
1Henceforth, the term “program” will be used in this document to include government establishments, organizations, programs, activities, and functions.
2Under the Single Audit Act, as amended, federal awards include federal financial assistance (grants, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, or other assistance) and cost-reimbursement contracts.
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