IIA and GAO Work to clarify standards differences.(The Institute of Internal Auditors)(U.S. General Accounting Office)

According to an article in the August 2003 Internal Auditor, the U.S. General Accounting Office (GAO) and The Institute of Internal Auditors (IIA) are working together to clarify any perceived discrepancy between the two organizations' positions on auditor independence.

For government auditors following The IIA's International Standards for the Professional Practice of Internal Auditing (or Red Book), consulting services as described by The IIA Standards are compatible with audit services as described by the GAO in its standards (or Yellow Book) if certain principles and safeguards are met.

GAO staff has publicly acknowledged that the vast majority of services being provided under The IIA's definition of consulting appear to be audit and assurance services. The GAO has further acknowledged that its use of the term consulting was directed to nongovernment auditors (for the most part, CPAs in public practice) who perform audits of government and nonprofit entities under the Government Auditing Standards. The substance of the issue appears to be that both organizations are using the term consulting to mean two entirely different things.

Most readers recognize that consulting and other nonaudit services provided by public accountants jeopardize the independence of external audit firms. The reason for this is that ...