Chapter 2
Auditing Standards
A.
General
The County Charter is silent on standards applicable to the audit function. The
resolutions establishing the audit function refer to generally accepted governmental
auditing standards (GAGAS) as the standards to comply with for performance of audit
work. The original resolution (R87-1226) referred to GAGAS as the audit standard to be
applied “where appropriate” and to the Standards for the Professional Practice of Internal
Auditing promulgated by the Institute of Internal Auditors (IIA) as the standard to be
applied for determination of independence and objectivity. Resolution R2005-0372
eliminated reference to IIA standards and made GAGAS the sole standard for the Office.
In July, 2007, the Government Accountability Office (GAO), formerly the General
Accounting Office, published “Government Auditing Standards – 2007 Revision.” This
document is now the standard reference for all issues relating to governmental auditing
for all auditing matters including independence and objectivity. The GAO may update
Government Auditing Standards (GAS) from time-to-time and these updates will
supercede the 2007 edition referenced here automatically.
The majority of audit work performed in the Internal Auditor’s Office is performance
audit work. Accordingly, the GAS standards most applicable to this office are the
General Standards and the Performance Audit Standards. The Office also conducts
attestation audits which include agreed upon procedures examinations. The Office
follows GAS for those audits as well.
GAS consists of Ethical Principles in Government Auditing, General Standards, Field
Work and Reporting Standards for Financial Audits, Standards for Attestation
Engagements (General, Field Work and Reporting), and Field Work and Reporting
Standards for Performance Audits. The General Standards address independence,
professional judgment, competence, and quality control and assurance, and are generally
applicable to all types of audit work.
The Financial Audit Field Work standards combine the three AICPA GAAS field work
standards of planning and supervision, internal control understanding and sufficient
competent evidence with additional GAS field work standards addressing auditor
communications, prior audits, compliance, findings and documentation. The Financial
Audit Reporting Standards combine the four AICPA reporting standards of GAAP basis
statements, consistency, adequacy of disclosures and auditor opinion with additional
GAS standards addressing compliance, internal controls, views of responsible officials,
privileged and confidential information, and report issuance and distribution.
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The Attestation Engagement Standards combine the AICPA general standard of
evaluation against reasonable criteria and the AICPA field work standards of planning
and supervision and sufficient evidence with additional GAS standards addressing auditor
communications, prior audits, internal controls, fraud, abuse and illegal acts, findings and
documentation. The Attestation Engagement Standards also combine the AICPA
reporting standards of identifying the subject matter and assertion, conclusions,
reservations (if any) and restrictions on use of reports with additional GAS standards
addressing auditor compliance with GAS, deficiencies in internal control, views of
responsible officials, privileged and confidential information, and report issuance and
distribution.
The Performance Audit Field Work Standards relate to planning and supervision;
sufficient, competent, and relevant evidence; and audit documentation. There is no
reference to any AICPA standards. The Performance Audit Reporting Standards relate to
the form of the report, report contents, report quality and report issuance and distribution.
The Internal Auditor’s Office also has office standards for the form, content and
distribution of planning reports, discussion draft reports and final audit reports. All staff
members are expected to comply with office standards as well as GAS standards.
B.
Adherence to GAS
The 2005 revision of the internal audit resolution (see Chapter 1) establishes GAS as the
standard for the Internal Auditor’s Office. All audits are conducted in accordance with
GAS as promulgated by the Governmental Accountability Office as they currently exist
or as they may be amended from time to time to the maximum extent possible given the
specific circumstances of each audit.
C.
Other Professional Standards
The Institute of Internal Auditors (IIA) has issued International Standards for the
Professional Practice of Internal Auditing. These standards are generally applicable to
internal auditors working in private companies but can be applicable to internal auditors
in government and not for profit organizations. The Code of Ethics of the IIA requires
internal auditors certified by the Institute to comply with the International Standards.
Internal Audit staff members who hold a certification from the IIA are expected to
comply with standards established by the IIA to the extent those standards do not conflict
with GAS.
The IIA is recognized as the professional organization in a position to promulgate
standards for internal audit activities. Standards promulgated by the IIA may be followed
in situations where the guidance contained in GAS is unclear or obviously inappropriate.
Individual staff members who are Certified Internal Auditors and members of the IIA are
expected to comply with IIA Professional Standards (IIAPS) to the extent there is no
conflict between GAS and IIAPS. Audit staff members should distinguish between
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standards that apply to the individual and standards that apply to the entire office and take
steps to comply with the IIAPS which apply at an individual level.
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