What is the Yellow Book?

Definition: The Yellow Book is the annual publication by the GAO of the Generally Accepted Governmental Auditing Standards. Every year the GAO publishes a book that contains all of its updated rules and standards for conducting audits in the public sector. This book has always featured a bright yellow cover. Rather than calling it the GAO book of GAGAS, people started calling it the Yellow Book. The name has stuck ever since.

What does the yellow book mean?

What is the definition of the yellow book? The Yellow Book is used by CPAs and governmental auditors who audit the Federal government, state governments, and even local governments. The Yellow Book includes audit standards and guidance for both financial and performance audits. The main audit standards addressed in the Yellow Book relate to:

  • Independence
  • Due Care
  • Continuing Professional Education (CPE)
  • Supervision
  • Quality Control

Let’s look at some examples.


In the US, GAAP or Generally Accepted Accounting Principles are the standards of accounting for all public companies with some international standard exceptions. GAAP is established and created by the FASB or the Financial Accounting Standards Board.

Auditing standards in the US are set by the ASB or the Auditing Standards Board. These standards set the professional expectations for auditors while auditing companies in the private sector. ASB does not create auditing standards for the public sector like government bodies.

Accounting standards for the public sector are created by the GAO or the Government Accountability Office. The standards that the GAO creates are commonly referred to as the GAGAS or Generally Accepted Governmental Auditing Standards.

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