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What a difference a letter makes... GAGAS -- Generally Accepted Government Auditing Standards -- are quite different from GAAS, Generally Accepted Auditing Standards. (And don't confuse either one with GAAP -- Generally Accepted Accounting Practice.) GAGAS are the rules that govern audits mandated by the government... in other words, the audits that become compulsory as soon as the government gives you money. GAAS are (relatively) simple. Surprisingly, GAAS allows auditors to issue an unqualified, usually called "clean", opinion even if your internal controls are weak to nonexistent. Under GAGAS, far from it! Auditors apply uniform tests to your internal system, and if it doesn't measure up, they proceed with additional tests and auditing procedures to gather evidence which will support an opinion of your financial statements as a whole. Weak internal controls will be disclosed in the REPORT ON COMPLIANCE AND ON THE INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS. To arrive at the conclusions in that report, your auditors will rigorously examine internal controls, and assess your system's compliance with prevailing laws and regulations, as well as with any special conditions and requirements of government awards. This will be more of a pain than a GAAS audit and, unfortunately for you, cost more. |