Reporting Auditors’ Compliance with GAGAS

GAO-03-673G Government Auditing Standards > Chapter 5 Reporting Standards for Financial Audits > Reporting Auditors’ Compliance with GAGAS

5.05 The standard related to reporting auditors’ compliance with GAGAS for financial audits performed in accordance with GAGAS is:

Audit reports should state that the audit was performed in accordance with GAGAS.

5.06 When the report on the financial audit is submitted to comply with a legal, regulatory, or contractual requirement for a GAGAS audit, or when GAGAS are voluntarily followed, the report should specifically cite GAGAS and may also cite AICPA standards. “GAGAS” refers to all the applicable standards that the auditors should follow during the audit, and the statement of compliance should be qualified in situations in which the auditors did not follow an applicable standard. In these situations, the auditors should disclose in the scope section of the report the applicable standard that was not followed, the reasons therefor, and how not following the standard affected, or could have affected, the results of the audit. In assessing the impact on the results of the audit of not following an applicable standard, auditors may need to qualify the assurances provided, disclaim from providing any assurances, or withdraw from the audit.

5.07 An audited entity receiving a GAGAS audit report may also request auditors to issue a financial audit report for purposes other than complying with requirements calling for a GAGAS audit. For example, the audited entity may need audited financial statements to issue bonds or for other financing purposes. GAGAS do not prohibit auditors from issuing a separate report conforming only to the requirements of AICPA standards. When a GAGAS audit is the basis for an auditors’ subsequent report under the AICPA standards, it would be advantageous to users of the subsequent report for the auditors’ report to include the information on internal control, compliance with laws, regulations, and provisions of contracts or grant agreements, fraud, and abuse that is required by GAGAS but not required by AICPA standards.