Financial Audits
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GAO-03-673G Government Auditing Standards > Chapter 2 Types of Government Audits and Attestation Engagements > Financial Audits
2.05 Financial audits are primarily concerned with providing reasonable assurance about whether financial statements are presented fairly in all material respects in conformity with generally accepted accounting principles (GAAP),1 or with a comprehensive basis of accounting other than GAAP. Other objectives of financial audits, which provide for different levels of assurance and entail various scopes of work, may include
a. providing special reports for specified elements, accounts, or items of a financial statement;2
b. reviewing interim financial information;
c. issuing letters for underwriters and certain other requesting parties;
d. reporting on the processing of transactions by service organizations; and
e. auditing compliance with regulations relating to federal award expenditures and other governmental financial assistance in conjunction with or as a by-product of a financial statement audit.
2.06 Financial audits are performed under the American Institute of Certified Public Accountants’ (AICPA) generally accepted auditing standards for field work and reporting, as well as the related AICPA Statements on Auditing Standards (SAS). GAGAS prescribe general standards and additional field work and reporting standards beyond those provided by the AICPA when performing financial audits. (See chapters 3, 4, and 5 for standards and guidance for auditors performing a financial audit in accordance with GAGAS.)
1The three authoritative bodies for establishing accounting principles and financial reporting standards are the Federal Accounting Standards Advisory Board (federal government), the Governmental Accounting Standards Board (state and local governments), and the Financial Accounting Standards Board (nongovernmental entities).
2Special reports apply to auditors’ reports issued in connection with the following: (1) financial statements that are prepared in conformity with a comprehensive basis of accounting other than generally accepted accounting principles; (2) specified elements, accounts, or items of a financial statement; (3) compliance with aspects of contractual agreements or regulatory requirements related to audited financial statements; (4) financial presentations to comply with contractual agreements or regulatory requirements; or (5) financial information presented in prescribed forms or schedules that require a prescribed form of auditors’ report.
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