March 2000


Last July, the General Accounting Office (GAO) issued Amendment No. 2, "Auditor Communication," to Government Auditing Standards. CPAs planning upcoming engagements should bear in mind that the amendment is effective for audits of periods ending on or after January 1, 2000.

Amendment No. 2 requires specific communication with the auditee, the individuals contracting for or requesting the audit, and the audit committee regarding the scope of compliance and internal control work to be performed under Government Auditing Standards. The amendment also requires the auditor's report on the financial statements to emphasize the importance of the reports on compliance with laws and regulations and internal control over financial reporting when those reports are issued separately.

Finally, the amendment includes conforming changes to recognize, where applicable, AICPA standards issued subsequent to the 1994 revision of Government Auditing Standards and OMB Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations, in June 1997.

The full text of both the amendment and the revised Government Auditing Standards can be accessed from *

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