With the impending June 30, 2005, CPE reporting deadline, many CPAs will be impacted by the U.S. General Accounting Office 2003 revision to Government Auditing Standards (also known as the "Yellow Book").

The revised Yellow Book states that each auditor performing work under Government Auditing Standards should complete, every two years, at least 80 hours of CPE that directly enhances the auditor’s professional proficiency to perform audits and/or attestation engagements.

Since the issuance of the standards, practitioners have raised questions as to whether taxation courses would qualify as CPE for purposes of satisfying the 80-hour requirement. The GAO recently issued a clarification on this matter.

In summary, the GAO concludes that the majority of taxation courses would not enhance an auditor’s ability to perform audits and/or attestation engagements and, therefore, CPE related to such courses would not normally qualify as CPE for purposes of satisfying Yellow Book requirements. The requirements of the 2003 Yellow Book became effective for financial audits and attestation engagements of periods ending on or after Jan. 1, 2004.

As such, auditors need to consider this change when considering compliance with the Yellow Book CPE requirements beginning in 2004. However, the notice on the GAO’s web site says that for audit organizations whose two-year period for CPE compliance is calendar years 2003 and 2004, CPE taken in taxation during 2003 would generally count toward the 80-hour requirement. Those organizations would use the new requirements for 2004 and apply the new requirements to the remaining number of CPE hours needed in 2004 to comply with the standards.

The GAO has an e-mail box established, yellowbook@gao.gov, to handle inquiries directly related to Government Auditing Standards.

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