Peer Review: Governmental Updates

Yellow Book CPE Requirements: Are You Ready?

A common question firms are asking AICPA Peer Review staff is what exactly is required related to the Yellow Book continuing professional education (CPE) requirements. Chapter 4 of the 2018 revision of Government Auditing Standards, also referred to as GAGAS or the 2018 Yellow Book, can be referred to by auditors for a complete understanding of the CPE requirements, including application guidance on CPE subject matter.

The following provides a high-level summary of the requirements.

Each auditor who plans, directs, performs procedures for, or reports on engagements conducted in accordance with the 2018 Yellow Book should complete at least 80 hours of CPE in every 2-year period as follows: (GAS paragraph 4.16)

• 24 CPE hours should be in a subject matter directly related to the government environment, government auditing, or the specific or unique environment in which the audited entity operates (refer to GAS paragraph 4.23 for subject matter that qualifies to meet the 24-hour requirement).
• 56 CPE hours should be in a subject matter that directly enhances the auditors’ professional expertise to conduct engagements (refer to GAS paragraph 4.24 for subject matter that qualifies to meet the 56-hour requirement).

Certain topics may not qualify as CPE for purposes of satisfying 2018 Yellow Book requirements (refer to GAS paragraphs 4.35-.36 for subject matter that may not qualify for CPE hours under the 2018 Yellow Book).

Within the subject matter categories outlined in the 2018 Yellow Book’s application guidance, determining what subjects are appropriate for individual auditors is a matter of professional judgement. The audit organization is ultimately responsible for determining whether a subject or topic qualifies as acceptable CPE for its auditors (GAS paragraph 4.21).

For more information on Yellow Book engagements, consider the following resources:

• To view the 2018 Yellow Book, GAO Yellow Book web page
• For Yellow Book practice aids and tools, AICPA’s Governmental Audit Quality Center
• To assist in understanding auditor’s responsibilities when auditing financial statements in accordance with the Yellow Book, AICPA Government Auditing Standards and Single Audits Audit Guide

GAQC Resources and Tools for Auditors

The AICPA Governmental Audit Quality Center (GAQC) has developed resources that can assist you in performing engagements under Government Auditing Standards and single audits. As a public service, the GAQC periodically leaves certain resources open to the public. These resources include, but are not limited to:

• OMB Compliance Supplement Resource Center
• GAQC Archived COVID-19 Resources
• GAQC Alerts
• GAQC Archived Web Events
• Single Audit Resources
• Governmental Illustrative Auditor’s Reports

We encourage you to regularly check the GAQC Resources page for any new resources and share with your clients, where appropriate, to enhance audit quality within the profession.

Single Audit Resources from HHS-OIG

The United States Department of Health and Human Services (HHS), Office of Inspector General (OIG) recently posted a new web page in an effort to help stakeholders strengthen their understanding of the scope of single audits and to improve audit quality. HHS is encouraging members of the single audit community to use this page as an educational resource.

If your client expends $750,000[1] or more in federal awards in a fiscal year, a single audit is likely required. These funds can be provided directly from the federal agencies or pass-through entities such as state and local agencies or not-for-profit organizations. The single audit is a highly specialized organization-wide audit intended to provide assurance that a nonfederal entity has adequate internal controls in place and is in compliance with program requirements. Single audits have a significant public interest component as they are relied on by federal agencies as part of their responsibilities for determining compliance with requirements of federal awards by nonfederal entities.

Be sure to check out these resources on single audits:

• To assist in understanding OIG efforts around performing desk reviews and quality control reviews, HHS-OIG Oversight Activities
• For summaries of common single audit quality deficiencies, Desk Review Common Quality Deficiencies and Quality Control Review Common Quality Deficiencies
• For helpful tools used in single audits, Compliance Tools and Resources
• For informal feedback to the single audit community on single audits, for-profit audits, and foreign audits, Frequently Asked Questions

Peer Review extension reminder!

While peer reviews are no longer receiving automatic due date extensions, extensions may be granted in certain circumstances. If a firm requesting an extension conducts engagements in accordance with Government Auditing Standards, you should follow normal United States Government Accountability Office guidance as it relates to external peer review extensions. Per the 2018 Yellow Book, “In cases of unusual difficulty or hardship, extensions of the deadlines for submitting peer review reports exceeding 3 months beyond the due date may be granted by the entity that administers the peer review program with the concurrence of GAO” (GAS paragraph 5.64).

If your firm performs Yellow Book engagements, please don’t forget to take these requirements into account when requesting an extension!

For technical assistance regarding the Yellow Book, refer to yellowbook@gao.gov or 202.512.9535.

[1] Please note on April 4, 2024, the U.S. Office of Management and Budget (OMB) issued revisions to 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). A key change includes, but is not limited to, increasing the threshold for a single or program-specific audit from $750,000 to $1 million. Stay tuned to the 2024 OMB Compliance Supplement for information on when changes in Subpart F, Audit Requirements, take effect.

If you have any questions about yellow book requirements and single audit resources, please reach out to our Peer Review experts at maner@manercpa.com or by calling us at 517-323-7500.