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Advanced Auditing

Notes GAGAS establish field work standards for financial audits in addition to the requirements
contained in the AICPA standards. Auditors should comply with these additional standards
when citing GAGAS in their audit reports. The additional government auditing standards
relate to:
1. auditor communication during planning;

2. previous audits and attestation engagements;
3. detecting material misstatements resulting from violations of provisions of contracts or
grant agreements, or from abuse;

4. developing elements of a finding; and
5. audit documentation.

Notes Under AICPA standards and GAGAS, auditors should communicate with the audited
entity their understanding of the services to be performed for each engagement and
document that understanding through a written communication. GAGAS broaden the
parties included in the communication and the items for the auditors to communicate.

10.4.2 Reporting Standards for Government Financial Audits

The GAGAS includes all of the auditing standards established by the American Institute of
Certified Public Accountants, as well as additional standards for conducting financial audits.
The communication and previous audit standards provide guidance for the pre-audit stage,
while the standards of non-compliance with regulations, developing elements of findings of the
engagement and audit documentation provide guidance for the actual audit. The GAGAS also
follows the AICPA standards in the reporting area and imposes additional standards. Auditors
must report on the internal control and compliance with provisions of the law and must report
any deficiencies in internal control and compliance. Additionally, auditors must report on the
views of responsible officers and confidential information.

For financial audits, GAGAS incorporate the American Institute of Certified Public Accountants
(AICPA) field work and reporting standards and the related statements on auditing standards
(SAS) unless specifically excluded or modified by GAGAS.
AICPA Reporting Standards

The four AICPA generally accepted standards of reporting are as follows:
1. The auditor must state in the auditor’s report whether the financial statements are presented
in accordance with Generally Accepted Accounting Principles (GAAP).

2. The auditor must identify in the auditor’s report those circumstances in which such
principles have not been consistently observed in the current period in relation to the
preceding period.
3. When the auditor determines that informative disclosures are not reasonably adequate,
the auditor must so state in the auditor’s report.

4. The auditor must either express an opinion regarding the financial statements, taken as a
whole, or state that an opinion cannot be expressed, in the auditor’s report. When the
auditor cannot express an overall opinion, the auditor should state the reasons therefore
in the auditor’s report. In all cases where an auditor’s name is associated with financial

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