From the U.S. Government Accountability Office, www.gao.gov Transcript for: An Overview of GAO's Yellow Book Standards for Auditors and Audit Organizations Description: Audio interview by GAO staff with Marcia Buchanan, Assistant Director, Financial Management and Assurance Related GAO Work: GAO-12-331G: Government Auditing Standards: 2011 Revision (Supersedes GAO-07-731G) [Reissued on January 20, 2012] Released: August 2013 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's August 2013. Together, the Comptroller General and the Advisory Council on Government Auditing Standards maintain a book of standards for auditors and audit organizations. Government Auditing Standards, also known as Generally Accepted Government Auditing Standards, or the Yellow Book, outlines auditors' professional qualifications, audit quality guidelines, and the characteristics of good audit reports. Marcia Buchanan has been working to maintain the Yellow Book for 22 years. Recently, GAO's Sarah Kaczmarek sat down with Marcia to talk about the Yellow Book. [ Sarah Kaczmarek: ] What is the Yellow Book? And can you talk a bit about its history? [ Marcia Buchanan: ] Well, the Yellow Book is Generally Accepted Government Auditing Standards. It is a publication that GAO's been producing since 1972. And the way the first Yellow Book happened was, the State Audit Community came to the Congress and said, "Gee, we need a set of standards that increase accountability and transparency for government money." The Congress turned to GAO and asked us to put together a set of auditing standards. Interesting enough, the Government Auditing Standards, known as the Yellow Book, is named the Yellow Book because the group that put it together in 1972 thought that it oughtta have a gold cover on it, called it the "Golden Rules of Auditing." And the Comptroller General at the time, Elmer Staats, thought that was very presumptuous. And so it became, then, the Yellow Book. It got close to the gold but not completely. So the Yellow Book it became. And the only thing that will never change on the Yellow Book is the color of the cover. [ Sarah Kaczmarek: ] How would you explain the role of the auditor, then? [ Marcia Buchanan: ] Well, I sometimes use a story that I used explaining what I do for a living when my daughter was four years old, to her preschool class. I asked the class how many of them are asked to brush their teeth at night and all the hands of these children went up. And I said, "Okay, at the end of you brushing your teeth do your parents ever ask you to smell your breath?" And I said, that's what we as auditors do. We do tests to make sure what people are saying, the assertion that management is making, is actually true or not. There's other tests that you can use. You can look at the sink whether there's water there. You can look at the tube of toothpaste. Has it been used? You can feel the bristles on the toothbrush. Those are all actually corroborating tests to make sure that what people are saying is actually correct or not. The group of kids, they understood what auditing is based on that analogy. [ Sarah Kaczmarek: ] And what advice do you have for users of the Yellow Book? [ Marcia Buchanan: ] Well, the biggest thing on the Yellow Book is that you need to read the document and ask questions along the way. If you have problems implementing, give us a call. We can help you try to implement it. And then also use common sense. Think about what we're trying to achieve in the Yellow Book. It's accountability and transparency along the way. And if you keep those kind of goals in mind as well as using the common sense, you'll be able to do it. [ Sarah Kaczmarek: ] And how has the Yellow Book changed over the years? [ Marcia Buchanan: ] Well, it's evolved along the way. The first Yellow Book, if you look at it, was probably only about 24 pages. I think we're up to well over a hundred now. So at the beginning it was one set of standards for any kind of audit that you were doing. Pretty much at that time financial audit was the only game in town. But along the way government auditors starting to do performance audits. At one time they were called economy and efficiency audits, or operational audits, or other things. But we evolved into having both financial audits, attestation engagements, and performance audits. And those chapters became more and more robust along the way. [ Sarah Kaczmarek: ] Finally, for taxpayers interested in Government Auditing Standards, what's the bottom line here? [ Marcia Buchanan: ] The bottom line is that the Yellow Book provides accountability and transparency to things that the auditor is looking at. It provides information that people can then turn around and use. And decision makers know that they can rely on the information in audit reports to make decisions along the way, regardless whether it's a financial audit, an attestation engagement, or a performance audit. The users know that they can rely on that information and use it to make decisions along the way. [ Narrator: ] To learn more visit GAO.gov and be sure to tune in to the next episode of GAO's Watchdog Report for more from the Congressional Watchdog, the U.S. Government Accountability Office.