![]() ![]() Although both audit standards are similar in nature, another critical difference is the official bodies that govern them. The primary and most obvious difference between the two accounting standards is the type of organization that the audit is targeting GAAS applies to private and public businesses, while GAGAS is used for government agencies and entities. These guidelines also help investors to make sense of financial reports and to quickly and easily extract useful information from these reports. GAAS gives investors and other stakeholders the assurance that a company’s financial statements are consistent across the board. Generally Accepted Accounting Standards (GAAS) are also specific guidelines governing the preparation of financial statements. Generally Accepted Auditing Standards (GAAS) CPA firms use Yellow Book standards when they are performing financial audits that include an A-133 “single audit.” A CPA or audit firm will also use the GAGAS when conducting performance audits used to evaluate the performance of a program or project. General Accepted Governmental Auditing Standards (GAGAS) are usually called the Yellow Book and are a set of auditing standards that are set forth by the Government Accountability Office (GAO). Here’s a basic outline of both auditing standards and how they compare. Others, however, wonder why two different sets of accounting standards exist and how they differ. The odds are, if you’re not an accountant or CPA, you haven’t given it too much thought. ![]() Audits can be a confusing business, and one common misunderstanding stems from the differences between GAAS and governmental auditing standards.
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