On May 2, 2005, the GAO released a document titled Guidance on GAGAS Requirements for Continuing Professional Education that will be effective for CPE measurement periods beginning on or after June 30, 2005 (with earlier adoption encouraged). The document provides guidance to auditors in meeting the CPE requirements contained in the Yellow Book and replaces the predecessor 1991 CPE Interpretation.

The document is a must read for any firm conducting or contemplating Yellow Book engagements and any CPE provider that works with them.

The document itself is available online, as well as a two-page summary of changes to the document. The document contains more significant changes than were anticipated based on the related exposure draft issued last year. Included in the significant changes are the following:

• Subjects more staff members to the 24-hour CPE requirement – In the past, staff members not involved in planning, directing or reporting on the audit or attestation engagement, and who charged less than 20 percent annually of their time to audits and attestation engagements following GAGAS did not have to comply with the 24-hour CPE requirement. Now, these staff members will be subject to the 24-hour CPE requirement, but exempt from the remainder of the 80-hour requirement. The effect is that some staff will now be able to take less overall CPE to meet the Yellow Book requirements but these same staff will now have to take courses that meet the 24-hour requirement (from which they were previously
  exempt).
• Clarifies that CPE programs should have learning objectives.
• Provides new guidance on what topics do and do not qualify for Yellow Book CPE.

This guidance includes the following:

Related to the 80-hour requirement – In paragraph 23, the document provides additional guidance on the taxation topics that may and may not qualify. Probably the most significant development here (from the 2004 guidance) is if the analysis of an entity’s tax return is useful and relevant in performing an audit, auditors would be able to claim GAGAS CPE for the related training.

Related to the 24-hour requirement – The courses that qualify for the 24-hour requirement may have been broadened, subject to how you interpret the document. Included in the new language is a discussion that the Yellow Book may be/will be used in conjunction with professional standards of other authoritative bodies and, if that was the case, training in the other standards would be relevant. Professionals will want to be careful in how they interpret and apply this wording. The courses will need to be standards-based and not vague or generic auditing type courses.

Related to both the 24-hour and 80-hour requirement – In paragraph 26, the document provides a listing of topics that generally would not qualify towards the Yellow Book CPE requirements. Included in the listing are: certain training in taxation, personal financial planning and investment, taxation strategies, estate planning, retirement planning, practice management, etc.

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