Audits of private companies follow GAAS. Audits of government entities, and of nonprofits that spend federal money, follow a different standard: GAGAS, also known as the Yellow Book. GAGAS builds on familiar auditing standards, then adds a layer built for public accountability. Here’s what it covers, who it applies to, and what changed in the 2024 revision. What Is GAGAS? GAGAS stands for Generally Accepted Government Auditing Standards. Most practitioners just call it the Yellow Book, a nickname that comes from the color of the standard’s cover. The US Government Accountability Office (GAO) issues GAGAS under the authority of the Comptroller General of the United States. It governs audits of federal agencies, and it extends to any state, local, or nonprofit entity that receives and spends federal awards. Many other auditors follow GAGAS voluntarily, even when it isn’t required. GAGAS incorporates GAAS as its foundation, the same auditing standards the AICPA (American Institute of Certified Public Accountants) sets for private-company audits. GAGAS then layers on requirements GAAS doesn’t include: stricter independence rules, continuing education, a formal quality management system, and testing for compliance with the terms of federal awards, not just the fairness of the financial statements. The result is one consistent standard for auditing how public and federal funds get spent, whatever state, agency, or nonprofit is doing the spending. GAGAS vs. GAAS vs. GAAP vs. PCAOB Standards These four terms get confused often. Here’s a clear breakdown: Framework Governs Issued by Applies to GAAP How companies prepare financial statements FASB (GASB for state and local governments) All financial reporting, not an audit standard GAAS How auditors perform private-company and nonprofit audits AICPA’s Auditing Standards Board Financial statement audits outside the public markets GAGAS (Yellow Book) How auditors perform government and federal-award audits US GAO, under the Comptroller General Federal agencies, and state, local, or nonprofit entities receiving federal awards PCAOB standards How auditors perform public company audits Public Company Accounting Oversight Board (PCAOB) Financial statement audits of SEC-registered issuers Which standard applies depends on who’s paying for the audit and who’s being audited, not the entity type alone. A nonprofit with no federal funding follows GAAS. The moment it crosses the federal-award threshold, GAGAS applies too. The Five GAGAS Ethical Principles GAGAS opens with ethics, not procedure. Five principles guide every decision an auditor makes on a GAGAS engagement: Public interest. Serve the collective well-being of the people and communities the audit affects, not any one group. Integrity. Reach conclusions that are honest, nonpartisan, and grounded in fact. Objectivity. Stay independent in mind and in appearance, so findings rest on evidence rather than pressure from any side. Proper use of government information, resources, and position. Use access and authority only for the purposes the audit calls for, never for personal gain. Professional behavior. Follow applicable laws, regulations, and standards, and avoid conduct that would discredit the profession. These principles apply on every engagement, whether it’s a routine financial audit or a high-profile performance review of a federal program. GAGAS Structure and the 2024 Revision The Yellow Book organizes its requirements into general standards, covering ethics, independence, competence, and quality management, plus separate standards for three engagement types: financial audits, attestation engagements, and performance audits. GAO issued the most recent update, the 2024 revision, on February 1, 2024, its first major update since 2018. The core change replaces the old quality control chapter with a full system of quality management: a risk-based approach that puts an audit organization’s leadership on the hook for proactively managing engagement quality, scaled to the size and complexity of the firm. The revision also adds application guidance on key audit matters to the financial audit standards. The new requirements take effect for financial audits, attestation engagements, reviews of financial statements, and performance audits for periods beginning on or after December 15, 2025. Audit organizations need a compliant system of quality management designed and implemented by that date, with a full evaluation of the system due by December 15, 2026. GAO permits early implementation. Yellow Book Audit vs. Single Audit Practitioners may use “Yellow Book audit” and “Single Audit” interchangeably, as if they mean the same thing, but there are key differences that come down to scope. A Yellow Book audit is any engagement performed under GAGAS: a financial audit, an attestation engagement, or a performance audit. Federal agencies use GAGAS for their own financial statements. A state or local government that receives no federal funding at all can still be audited under GAGAS. Being audited under GAGAS, on its own, says nothing about federal award spending. A Single Audit is a specific, more demanding version of a GAGAS financial audit. It applies only to non-federal entities, nonprofits, higher education institutions, state and local governments, and tribal governments, and only once they cross the federal-award spending threshold. On top of the standard financial statement work, it adds compliance testing against the terms of each major federal program the entity received. Every Single Audit is a Yellow Book audit. Not every Yellow Book audit is a Single Audit. A city government’s routine GAGAS financial audit doesn’t turn into a Single Audit unless the city spent enough federal award money that year to cross the threshold. For the threshold amount, what counts toward it, and how major programs get selected, see our complete guide to Single Audit requirements. The Evidence and Documentation Load Under GAGAS GAGAS generates enough paperwork that some audit teams are starting to look to AI for relief. But the AI has to hold up to what GAGAS actually requires: sufficient, appropriate evidence with a clear trail back to the source. That bar sits above a typical GAAS-only workpaper file. Compliance testing and internal control testing each add their own layer of workpapers, sign-offs, and supporting documents. Stack those on top of standard financial statement testing, and a GAGAS engagement generates far more documentation than a GAAP-only audit of a comparable entity. Audit teams typically feel GAGAS most in that documentation work: tracking down the right support, tying every conclusion back to a source document, and keeping compliance testing organized alongside the financial statement work. Teams managing that load are increasingly moving away from static file folders toward structured, traceable evidence systems, which is where audit automation software like Trullion can support. Trullion extracts data directly from source documents like grant agreements and expenditure records, then keeps every calculation and conclusion linked back to where it came from, so an auditor tracing a compliance test doesn’t have to reconstruct the trail by hand. To learn more about faster, error-free, but also compliant audits, check out our AI in Auditing article. FAQs What is GAGAS in accounting? GAGAS stands for Generally Accepted Government Auditing Standards. Auditors also call it the Yellow Book. It’s the set of standards the US Government Accountability Office issues for audits of government entities and organizations that receive federal awards. What is the Yellow Book in auditing? The Yellow Book is another name for GAGAS. The nickname comes from the color of the standard’s cover when the GAO first published it. Who is required to follow GAGAS? Federal agencies, and any state, local, or nonprofit entity that receives and spends federal awards, must follow GAGAS when their audits call for it. Many other auditors follow GAGAS voluntarily. Is GAGAS the same as GAAS? No. GAGAS incorporates GAAS as its foundation for financial audits, then adds requirements GAAS doesn’t include, such as stricter independence rules, continuing education, and compliance testing tied to federal award terms.