Lesson: GAAS vs. GAGAS

In this lesson, the differences between Generally Accepted Auditing Standards (GAAS) and Generally Accepted Governmental Auditing Standards (GAGAS) are examined. The distinction between the roles of the auditor and the financial statements is emphasized, highlighting that auditors follow auditing standards and not GAAP. The development and maintenance of these standards by different entities, such as the AICPA and the Governmental Accountability Office, are discussed. The lesson covers the primary difference in usage, with GAAS applying to private and public businesses and GAGAS applying to governmental agencies and entities. Additionally, the unique focus on internal controls, accountability, and compliance in GAGAS is explored. Extended responsibilities under GAGAS are reviewed, with an emphasis on the concept of obtaining reasonable assurance instead of absolute assurance in audits.