Many organizations are subject to reporting under generally
accepted government auditing standards, also known as the Yellow
Book. This reporting applies to all organizations that are subject
to Single Audit reporting, HUD audits, most charter/contract
schools and many social service agencies that receive state
funding.
The 2018 Yellow Book was recently updated and includes a
significant change regarding auditor independence. In essence,
auditors are no longer considered independent with respect to the
audit if auditors prepare an organization's financial
statements without having one or more safeguards in place.
Safeguards may include: A separate and independent engagement
quality control review or separate and independent team members who
are responsible for preparing the financial statements. Either
safeguard will likely result in an increase in audit time and
cost.
