Question

Auditing Standards: According to Government Auditing Standards paragraphs and Government Performance Audit Textbook paragraphs below, why do we need auditing standards in the opinion based on your observation?

Government Auditing Standards Paragraphs:

"Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process.

Government auditing is essential in providing accountability to legislators, oversight bodies, those charged with governance, and the public. GAGAS engagements provide an independent, objective, nonpartisan assessment of the stewardship, performance, or cost of government policies, programs, or operations, depending upon the type and scope of the engagement."

Please also see the paragraphs from Government Performance Audit Textbook to get an idea:

"As the audit official with the largest staff in the country, the Comptroller General of the

United States, a legislative auditor, has taken the lead in establishing governmental audit

standards. A 1968 document, "Internal Auditing in Federal Agencies," paralleled the Statement

of the Institute of Internal Auditors. It called on federal agency internal auditors not to restrict

audit to accounting and financial matters, but also to review "operations and activities." It also

listed specific areas of concern in "appraising performance" and "evaluating efficiency and

economy." For those federal agencies that were in the forefront of the profession, the document

served as a useful codification of practice.

In 1972, the Comptroller General issued a landmark document. Titled Standards for Audit

of Governmental Organizations, Programs, Activities & Functions (and called the "Yellow Book"

because of its cover), the document served as a clarion call to some state and local government

auditors that had not yet moved beyond accounting and financial matters. More important, the

document dropped the notion that audit in government involved undefined "operations and

activities" other than accounting and financial matters. Recognizing that audit concepts and

practices were still evolving and that the standards were purposely "forward-looking," the Yellow

Book declared that the full scope of a government audit covered financial and compliance,

economy and efficiency, and program results. The three elements were defined this way:

1. Financial and compliance -- determines (a) whether financial operations are properly

conducted, (b) whether the financial reports of an audited entity are presented fairly, and

(c) whether the entity has complied with applicable laws and regulations.

2. Economy and efficiency -- determines whether the entity is managing or utilizing its

resources (personnel, property, space and so forth) in an economical and efficient manner

and the causes of any inefficiencies or uneconomical practices, including inadequacies in

management information systems, administrative procedures, or organizational structure.

3. Program results -- determines whether the desired results or benefits are being achieved,

whether the objectives established by the legislature or other authorizing body are being met,

and whether the agency has considered alternatives which might yield desired results

at a lower cost.

The underlying premise of the Yellow Book was, and continues to be, that of public

accountability. Public officials are accountable to those who provide the resources used to carry

out governmental programs. Consequently, they should render a full accounting to those to

whom they are accountable. Public accountability embraces the three elements of financial and

compliance, economy and efficiency, and program results. By including all three elements in its

scope, auditing - by providing independent judgments on those accountings - plays a major role

in the accountability process.

The Comptroller General's Government Auditing Standards have been updated several times

since they were first published in 1972 and a series of federal laws have added teeth to the

standards. Federal inspectors general and other federal auditors are required by law to comply

with them. Laws also required that the standards be followed in federal audits of state and local

governments, institutions of higher education, and other not-for-profit entities that received

federal financial assistance. Many state and local audit entities have adopted them either

officially or unofficially. The Washington State Auditor, for example, is specifically required to

follow Government Auditing Standards."

Answer 1