GAO Provides Exceptions to GAGAS CPE Requirements Due to COVID-19

Jerry Ashworth
May 11, 2020 at 08:28:42 ET
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The Government Accountability Office (GAO), in response to concerns related to disruptions created by the COVID-19 pandemic, recently issued an alert to its 2018 version of the Government Auditing Standards (GAGAS) that provides auditors more time to complete their continuing professional education (CPE) requirements.

“GAO is keenly aware of the wide-ranging impact of the coronavirus on people’s lives,” said U.S. Comptroller General Gene L. Dodaro, adding that the flexibilities provided under the alert, which were effective as of Feb. 29, “are intended to help auditors maintain the highest standards in their work, while accommodating the new realities of daily life, whether it’s working from home or caring for family members.” GAO stressed that these flexibilities do not apply to the CPE requirements of other professional organizations or licensing bodies.

Under GAGAS, also known as the Yellow Book, auditors must complete at least 80 hours of CPE every two years. This includes 24 hours in subject matter directly related to the government environment, government auditing or the specific or unique environment in which the auditing entity operates; and 56 hours in subject matter that directly enhances auditors’ professional expertise to conduct engagements (see ¶502 in the Single Audit Information Service). In addition, auditors are required to complete at least 20 of the 80 hours of CPE in each year of the two-year period.

Six-Month Grace Period

Although GAO’s alert does not remove the GAGAS CPE requirement, it now provides a six-month grace period to obtain CPEs. Specifically, the alert states that for audit firms whose two-year CPE measurement periods end between Feb. 29, 2020, and Dec. 31, 2020 (e.g, one that began June 30, 2018, and ends June 30, 2020), auditors with these firms who have not completed the 80-hour or the 24-hour CPE requirements for the two-year period may have up to six months immediately following the end of the two-year period to make up the deficiency. Any CPE hours completed toward a deficiency in one two-year period must be documented in the CPE records and may not be counted toward the requirements for the next period. Auditors who have not satisfied the CPE requirements after the grace period may not participate in GAGAS engagements until those requirements are satisfied.

Under another flexibility, the alert notes that auditors are not required to complete the 20 hours of CPE annually for CPE periods that end between Feb. 29, 2020, and Dec. 31, 2020. For example, if an auditor has only completed 10 hours of CPE during a one-year period that ends on June 30, the auditor under this exception is not required to complete the 20 hours of CPE prior to that date. However, the auditor must complete the remaining 70 hours of CPE by June 30, 2021, to meet the 80-hour requirement.

In another example, an auditor will not be required to complete the 20 hours of CPE as of June 30 if, during the second year of an audit organization’s two-year CPE period ending on June 30, the auditor has only completed 10 hours of CPE for that second year, but had completed 70 hours in the first year and had met the 24-hour government CPE requirement.

The alert also explains that when auditors earn CPEs in excess of the 80 hours required under GAGAS during the current two-year period, they will be able to carry over up to 40 hours of CPE to the following two-year CPE measurement period. However, if an audit firm’s two-year CPE measurement period ends after Dec. 31, 2020, extra CPE hours earned only through Dec. 31, 2020, may be carried over, and auditors may not carry over excess CPE units earned in prior two-year CPE periods. Also, an auditor may not apply the carryover CPE hours to the 24-hour government requirement or the 20-hour annual requirement.

Exemptions Section Clarified

The alert also clarified language under section 4.29 in GAGAS, which states: “The audit organization, at its discretion, may grant exemptions from a portion of the CPE requirement in the event of extended absences or other extenuating circumstances if situations such as the following prevent auditors from fulfilling those requirements and conducting engagements: (1) ill health, (2) maternity or paternity leave, (3) extended family leave, (4) sabbaticals, (5) leave without pay absences, (6) foreign residency, (7) military service and (8) disasters. The audit organization may not grant exceptions for reasons such as workload, budget or travel constraints.”

GAO clarified that if an auditor is working, including teleworking, audit organizations and auditors may not use this exemption, adding that it can only be used if the circumstances prevent the auditor from both fulfilling the CPE requirement and conducting GAGAS engagements. An exemption may be used, for example, if an auditor or the auditor’s dependents become ill, and the auditor is not able to work on GAGAS engagements. “The audit organization may use its discretion to determine the portion of CPE hours from which the auditor is exempted,” the alert explains.

To better explain the clarification, GAO provided an example in which an audit organization closes its offices because of the COVID-19 pandemic, but an auditor was able to telework and continue to work on GAGAS engagements. However, the auditor was unable to complete the 80 hours of CPE by the end of the audit organization’s two-year period. The audit organization may not grant the auditor an exemption from a portion of the CPE requirements based on section 4.29 of GAGAS, but the auditor can use the six-month grace period and the waiver of the 20-hour annual CPE requirement allowed under the GAO alert.

For More Information

The GAO alert is available at

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