The Yellow Book, referred to as the Generally Accepted Government Auditing Standards (GAGAS), is an assessing tool used by firms to analyze and generate accurate, quality, and competent audits. The Yellow Books offers objectivity, independence, and integrity in the process of doing audit work with set standards and practices that have been outlined. The scope of usage of the Yellow Book ranges from government institutions, government affiliate entities, and auditing companies. The framework the book provides dictates the necessary standards for generating and analyzing audit reports, qualification requirements for professional auditors and audit companies. Both the national and local governments use the Yellow Book to apply the required standards in their audits and generate regular and credible reports. Yellow Book revisions are usually passed through extensive and detailed processes before being incorporated and absorbed as standards. Public and professional comments are of exceptionally high importance together with the Comptroller General Advisory Council input on Government Auditing Standards as described by the Government Accountability Office (GAO). The book's various chapters outline several auditing metrics with the relevant standards, including terminology, ethics, risk and audit planning, quality assurance, auditing of auditors, reporting compliance, fraud, follow-up audit, and competence. The ultimate aim of the standards outlined in the GAGAS is to create independence in the performance of audit services and non-audit work.
The Red Book, known as the International Professional Practices Framework (IPPF) established by the Institute of Internal Auditors (IIA), provides professional guidance regarding internal auditing on two levels. Mandatory guidance with included standards and strongly recommended guidance. The Red Book has six components outlined in the book: internal auditing definition, the code of ethics, the international standards for the professional practice of internal auditing, and practice advisories. The Red Book is deliberate in purpose, having its place by demonstrating how practitioners should utilize and leverage the book's framework and standards in their ability and capacity to perform their internal auditing duties. The Red Book also enhances and protects organizational value by providing risk-based advice, objective assurance, and insight. The book can be perceived as a practice tool that allows public sector internal auditors to perform internal audit activities better and in a more valuable process within their companies and, therefore, can accomplish their objectives.
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The Green Book is an internal control established to help organizations achieve auditing goals in a better and more efficient capacity. The internal control helps the company run operations lawfully. Companies complying with laws regarding internal controls report credible information on operational endeavors as per the standards. Therefore, the Green Book is a standard for internal control. The Green Book is an afterthought to the Yellow Book for federal institutions, which applies five principles, each having several requirements and components termed as attributes. These principles are environment control, assessment of risks, control activities, information, communication, and monitoring. A federal entity uses the Green Book to create, implement, and manage internal controls to accomplish auditing goals. The Green Book process follows objective identification to design controls to have the controls in place and achieve the identified objective. The scope of usage of the Green Book ranges from program managing, financial and performance auditing, auditing on state expenditure, to compliance and personnel training. The book's structure incorporates components', principles and attributes' breakdown in establishing controls and standards.
References
Comptroller General of the United States. (2014). Standards for Internal Control in the Federal Government. United States Government Accountability Office , Federal Internal Control Standards, GAO-14-704G.
Comptroller General of the United States. (2018). Government Auditing Standards. United States Accountability Office, Government Auditing Standards , GAO-18-568G. 2018 Revision.
Office of the General Counsel. (2016). Principles of Federal Appropriations Law: Chapter 1, Introduction. United States Government Accountability Office , GAO-16-463SP. Fourth Edition, 2016 Revision.
Office of the General Counsel. (2016). Principles of Federal Appropriations Law: Chapter 2, The Legal Framework. United States Government Accountability Office , GAO-16-464SP. Fourth Edition, 2016 Revision.
Office of the General Counsel. (2016). Principles of Federal Appropriations Law: Chapter 3, Availability of Appropriations: Purpose. United States Government Accountability Office, GAO-17-797SP. Fourth Edition, 2017 Revision.
