The U.S. Government Accountability Office (GAO) issued the 2024 revision of Government Auditing Standards, commonly known as the Yellow Book, in February 2024. This revision introduces significant enhancements to strengthen audit organizations’ frameworks for conducting high-quality government audits, with a primary focus on transitioning from a system of quality control to a more proactive system of quality management. Audit organizations must design, implement, and operate a compliant system of quality management by December 15, 2025, coinciding with the standards’ effective date for most engagements. (Note: Due to a federal appropriations lapse in late 2025, federal audit organizations may defer implementation until March 16, 2026.)

How Government Auditing Standards Impact Audits

The key change appears in Chapter 5, retitled “Quality Management, Engagement Quality Reviews, and Peer Review,” replacing the 2018 version’s “Quality Control and Peer Review.” Quality management emphasizes leadership’s responsibility for proactively managing engagement quality. It is scalable, allowing the system’s nature, extent, and formality to vary based on factors like the organization’s size, geographic dispersion, personnel expertise, and engagement complexity.

The 2024 Yellow Book mandates robust monitoring and remediation processes. Audit organizations must investigate deficiencies, identify root causes, implement targeted remedial actions, and evaluate their effectiveness. A senior-level official with accountability for quality management must conduct an annual evaluation of the system.

How to Transition to a Proactive System of Quality

To assist with implementation, GAO released interpretive guidance titled Frequently Asked Questions: Establishing and Maintaining a System of Quality Management. This document, developed with input from the Comptroller General’s Advisory Council and other stakeholders, is divided into three sections:

Section I: Quality Management Risk Assessment Process

This foundational risk-based approach requires organizations to (1) establish quality objectives, (2) identify and assess quality risks (those with a reasonable possibility of occurring and impacting objectives), and (3) design and implement responsive policies and procedures.

Section II: Quality Management Monitoring and Remediation Process

Aimed at providing reasonable assurance that policies are effective, auditors comply with standards, and engagements are properly performed and reported. It supports ongoing improvement in quality.

Section III: Engagement Quality Reviews

Defines these as objective evaluations of significant judgments by non-team members, completed before report release. Organizations must assess if such reviews are needed to address quality risks and, if so, establish procedures—though reviews are not universally required.

Benefits to Proactive Quality Management

These updates reflect a modern, risk-based approach to ensure reliable, objective audits of government entities and award recipients. By shifting to proactive quality management, the 2024 Yellow Book aims to enhance accountability, transparency, and overall audit effectiveness in the public sector.

To access GAO’s Frequently Asked Questions: Establishing and Maintaining a System of Quality Management,go to their website.

About the Author

Stephanie Ojeda is Vice President of Product Management for the Life Sciences industry at AssurX. Stephanie brings more than 18 years of experience leading quality assurance functions in a variety of industries, including pharmaceutical, biotech, medical device, food & beverage, and manufacturing.