In response to the unprecedented challenges brought about by the COVID-19 pandemic, the US Government Accountability Office (GAO) has acknowledged the difficulties faced by auditors in meeting the continuing professional education (CPE) requirements for engagements conducted under generally accepted government auditing standards (GAGAS), commonly known as Yellow Book. This recognition has prompted the GAO to provide exceptions and relief measures for Yellow Book auditors grappling with CPE obligations during these exceptional times.
Yellow Book CPE Requirements Overview
Under normal circumstances, Yellow Book auditors are mandated to complete a minimum of 80 hours of CPE every two years. However, the specifics of these requirements delve deeper:
- Subject Matter Distribution:
- 24 of the 80 Yellow Book CPE hours must pertain directly to subjects related to the government environment, government auditing, or the unique context in which the audited entity operates.
- The remaining 56 hours must focus on subject matter that enhances the auditor's ability to conduct audit or attestation engagements.
- Annual Distribution:
- A minimum of 20 Yellow Book CPE hours must be completed each year within the two-year reporting period.
Challenges Recognized and Relief Measures Implemented
Recognizing the impact of the COVID-19 pandemic on the ability of accountants to fulfill Yellow Book CPE requirements, the GAO issued an alert on February 29, 2020. The alert acknowledges that auditors working or teleworking due to the pandemic cannot avail of the CPE exemption provided in Paragraph 4.29, which covers situations like military service, maternity leave, illness, and other matters. However, alternative relief measures have been introduced to address the unique circumstances brought about by the pandemic.
1. Grace Period for Deficiencies:
- For two-year reporting periods ending between February 29 and December 31, 2020, auditors who haven't completed the required 24 or 80 Yellow Book CPE hours may have a six-month grace period to rectify the deficiency.
- Hours completed during this grace period to make up for the deficiency cannot be double-counted towards the subsequent two-year reporting period.
2. Waiver of 20-Hour Annual Requirement:
- Auditors are not obliged to complete a minimum of 20 Yellow Book CPE hours for any one-year period ending between February 29 and December 31, 2020.
3. Carryover of Excess CPE Hours:
- For any two-year period in effect as of February 29, 2020, auditors are allowed to carry over up to 40 hours of Yellow Book CPE in excess of meeting the 80-hour requirement to the next CPE reporting period.
- However, these carried-over hours cannot be counted towards the 24-hour requirement for the next reporting period.
- For two-year periods ending on or after December 31, 2020, only hours earned through December 31, 2020, may be carried over to the subsequent reporting cycle.
Important Considerations and Disclaimers
The information presented regarding Yellow Book audit content in this article is intended for informational purposes only and should not be considered as tax advice. Individuals are advised to consult their own tax advisor for guidance tailored to their specific situations.
Jennifer Louis: A Beacon of Expertise
Jennifer Louis, with over 25 years of experience, stands as a beacon of expertise in designing high-quality training programs encompassing both technical and soft skills essential for professional and organizational success. In 2003, she founded Emergent Solutions Group, LLC, focusing on delivering practical and engaging accounting and auditing training. Jennifer commenced her career in audit with Deloitte & Touche and graduated summa cum laude from Marymount University with a BBA in accounting.
Navigating Challenges Together
As the global landscape evolves, the GAO's proactive measures provide a lifeline for Yellow Book auditors facing unprecedented challenges. Adapting to change and offering relief demonstrates a commitment to supporting the accounting community during these testing times. As we navigate the evolving terrain of professional requirements, staying informed and adaptable is key to success.